DAILY TECHNICAL REPORT

19 December, 2011
Please note: None of the strategies below represent trading advice or trading recommendations of any kind. Please refer to our full disclaimer.

MA RK ET
EUR/USD GBP/USD USD/JPY USD/CHF
Ron William, CMT, MSTA

S-TERM
MULTI-DAY

L-TERM
MULTI-WEEK

STRATEGY/ POSITION SHORT 1

ENTRY LEVEL 1.3280

OBJECTIVES/COMMENTS

STOP

1.2870 (Entered 12/12/2011) Await fresh signal. Await New Buy Trade Setup Above 80.00. Possible sell higher. Awaiting New Buy Trade Setup.

1.3140

USD/CAD AUD/USD GBP/JPY EUR/JPY EUR/GBP

SHORT 2

1.0050

0.9950/0.9660/0.9380 (Entered 13/12/2011) Await fresh signal. Missed Buy. Await New Setup.

1.0210

100.05 0.8615 1.2230 1705 34.1300

Sell limit 3 Sell Stop 3 SHORT 2 SHORT 2

0.8510 1.2130 1705 34.1300

0.8395/0.8300/0.8142 1.2030/1.1526/1.1002 1530/1300 (Entered 12/12/2011) 26.0700/23.3400 (Entered 01/11/2011)

Bijoy Kar, CFA

EUR/CHF GOLD SILVER

WINNER BEST SPECIALIST RESEARCH

DISCLAIMER & DISCLOSURES

Please read the disclaimer and the disclosures which can be found at the end of this report

Notes: Entries are in 3 units and objectives are at 3 separate levels where 1 unit will be exited. When the first objective (PT 1) has been hit the stop will be moved to the entry point for a near risk-free trade. When the second objective (PT 2) has been hit the stop will be moved to PT 1 locking in more profit. All orders are valid until the next report is published, or a trading strategy alert is sent between reports. CH-2008 Neuchtel info@migbank.com Switzerland www.migbank.com

MIG BANK / Forex Broker Tel +41 32 722 81 00

14, rte des Gouttes dOr Fax +41 32 722 81 01

EUR/USD EUR/USD

DAILY TECHNICAL REPORT

19 December, 2011

EUR/USD (Daily)

BERMUDA TRIANGLE

Short-covering around the key 1.3000 level.

FAILED
BREAKOUTS

EUR/USD is unwinding mildly from oversold conditions, driven by shortcovering as the market adjusts to a new bearish paradigm, following the break beneath that all-important psychological level at 1.3000.

BREAKOUT ZONE

(1.4000)

Our cycle analysis successfully signalled increased volatility within the first two weeks of December across risk proxies, including the equity and commodity markets. Expect some respite ahead of the holiday period.

200-DMA (1.4060)

1.3000 (PSYCHOLOGICAL) 1.2870 (2011 MAJOR LOW)

Watch for a sustained close beneath 1.3000 (psychological level) to resume EUR/USDs multi-month downtrend into 1.2870 (2011 major low).

UPTREND (2 YEARS)

Near-term resistance can be found at 1.3215 and potentially even 1.3550 (02 Dec high). Any rebound into these levels is likely to be short-lived.

EUR/USD daily chart, Bloomberg Finance LP

USD INDEX
EUR 57.6%, JPY 13.6%, GBP 11.9% CAD 9.1%, SEK 4.2%, CHF 3.6%

Inversely, the USD Index has extended its recovery higher to new 11-month highs, (a move worth over 10% from the summer 2010 lows).
11 MONTH HIGH

Speculative (net long) liquidity flows is strengthening once again and will continue to help resume the USDs major bull-run from its historic oversold extremes (momentum, sentiment and liquidity).
Special Report: EUR/USD A Fall From Grace ? Decline Targets 1.3770/1.3410.

VIDEO

MIG Bank Webinar: Why the US dollar is likely to gain up to 30% in 6-12 months.
BREAKOUT ZONE 200-DMA (75.92)

US Dollar Interview on Bloomberg

DEMARK BUY SIGNALS

13

KEY SUPPORT (73.50-73.00)

S-T TREND

L-T TREND

STRATEGY
SHORT 1: 1.3280, Objs: 1.2870, Stop: 1.3140

USD Index daily chart, Bloomberg Finance LP

www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 2

GBP/USD
Hourly price channel broken.

DAILY TECHNICAL REPORT

19 December, 2011

GBP/USD has recently broken above the top of the hourly price channel. This may have marked the final phase of short-term weakness from the 1.5780 lower high. However, we watch for a sustained move above this
200-day Average

area before initiating a potential buy trade setup. Demand for sterling is likely to be affected by the movement in selected core Euro-Zone sovereign markets. In particular we note that Italian 10 year yields are shying away from 7.000%. Daily structure is also suggestive of a return to test 7.000% and higher. A continuation of higher yields may see Sterling being adopted as a safe haven again. This reasoning would likely help to keep cable within its year long range.

GBP/USD daily chart, Bloomberg Finance LP

Failure to remain above 1.5423 will see an immediate target at 1.5272 and then potentially trend-line support at 1.5110.

GBP/USD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Await fresh signal.

www.migbank.com

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 3

USD/JPY
POST INTERVENTION RETRACEMENT (PIR I) MULTI-YEAR PATTERN ANTICIPATES BREAKOUT (85-80)

DAILY TECHNICAL REPORT

19 December, 2011

Weakening beneath 78.24 (DeMark Level).

USD/JPY is still weak beneath 78.24 (DeMark Level), as price continues to hold within a multi-day trading range (see hourly chart below).

QUAKE SHOCK!
G7 MOVE HIGH

POST BOJ MOVE (II) HIGH POST BOJ MOVE (III) HIGH

Confirmation beneath 77.25 (pivot level) would help trigger a third price retracement back to pre-intervention levels (PIR III) and potentially even a new post world war record low beneath 75.35 (PINL).

PIR II

PIR III

Sentiment in the option markets continues to suggest that USD/JPY buying pressure remains overcrowded as everyone continues to try and be the first to call the market bottom, within the end of this multi-year contracting pattern (see top chart insert).

DEMARK BUY SIGNAL AHEAD OF NEW POST WWII LOW (75.35)

USD/JPY daily chart, Bloomberg Finance LP

POST BOJ MOVE (III)

USD/JPY (60 MIN)

This may first inspire a temporary, but dramatic, price spike through psychological levels at 75.00 and perhaps even sub-74.00. Such a move would help flush out a number of downside barriers and stop-loss orders, which would create healthy price vacuum for a potential major reversal. The medium/long-term view remains bullish, as USD/JPY verges toward a major long-term 40-year cycle upside reversal. Expect key cycle inflection points to trigger over the next few weeks, offering a sustained move above our upside trigger level at 80.00/60, then 82.00 and 83.30.
Please select the link below to review our special coverage on USD/JPY. Special Report: USDJPY Verging on a major 40 year cycle reversal VIDEO Webinar: USD/JPYs Long-Term Structural Change Media Reports: CNBC / Squawk Box & Bloomberg

DEMARK SELL SIGNAL

KEY PIVOT LEVEL (77.25) TRIGGERS POST INTERVENTION RETRACEMENT

S-T TREND

L-T TREND

STRATEGY
Awaiting Renewed Buy Trade Setup above 80.00.

USD/JPY hourly chart, Bloomberg Finance LP

www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 426 4

USD/CHF

DAILY TECHNICAL REPORT

19 December, 2011

Encounters resistance close to our first target at 0.9555.

Look to sell higher.
200-day Average

USD/CHF has met resistance close to our initial target in our previous long strategy into the rise from 0.9176. We view the push under 0.9430 as

potentially breaking down the short-term bullish structure. However, while above 0.9342, there remains scope for a further rise back towards 0.9548 initially. Given that the region of the initial target has been tested and with yields continuing to rise in some core Euro-Zone sovereign markets, the trade location is deemed as poor. It is anticipated that a return to 7.000% in Italian 10 year yields is imminent. This may once again pressure USD/CHF to the USD/CHF daily chart, Bloomberg Finance LP downside. There is thus potentially a greater opportunity to sell at higher levels. Referencing Spanish and Italian government bonds back to their respective levels prior to the six party central bank agreement, we note that most of the positive after effects have worn off, with yields trading at 5.698% and 6.824% versus 6.374% and 7.355%, before the agreement. (These yields were trading at 5.699% and 6.685% respectively at the same time yesterday.)

S-T TREND

L-T TREND

STRATEGY
Possibly looking to sell higher.

USD/CHF hourly chart, Bloomberg Finance LP

www.migbank.com

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 5

USD/CAD
USD/CAD (Daily)

DAILY TECHNICAL REPORT

19 December, 2011

Unwinding from intraday resistance at 1.0425.

USD/CAD is still unwinding from intraday resistance at 1.0425, which coincided with a short-term DeMark exhaustion signal. The move has temporarily breached a multi-day bull-channel (see lower chart) and we prefer to wait for a resumption higher to open a buy trade setup. The bulls need to push back above 1.0425 and 1.0524 (25 Nov swing high), in order to trigger a breakout from the rates major triangle pattern. In terms of the big picture, a directional confirmation above 1.0680 is still needed to unlock the recovery into 1.0850 plus. This would extend the upside breakout from the rates ending triangle pattern, which was part of a major Elliott wave cycle (see top chart insert).

CONFIRMATION ABOVE 1.0680 OPENS LARGER RECOVERY

DEMARK BUY SIGNAL

200-DMA (0.9879)

USD/CAD daily chart, Bloomberg Finance LP

USD/CAD (60 MIN)
DEMARK SELL SIGNAL

Only a sustained close beneath 1.0200 and 1.0080, then parity unlocks
DEMARK SIGNAL KEY RESISTANCE (1.0425)

bearish setbacks into the long-term 200-day MA at 0.9879 and 0.9726 (31 Aug low).

st

EUR/CAD is unwinding mildly ahead of the base of an important multiBULL CHANNEL

month distribution pattern. A break beneath 1.3393-79 (19 Sept low/61.8% Fib), signals an important breakdown into 1.3140 and would provide substantial correlation pressure onto EUR/USD.

th

S-T TREND

L-T TREND

STRATEGY
Awaiting New Buy Trade Setup above 1.0425.

USD/CAD hourly chart, Bloomberg Finance LP

www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 6

AUD/USD
AUD/USD
(1 YEAR)

DAILY TECHNICAL REPORT

19 December, 2011

Strong unwinding from oversold conditions.

DEMARK SELL SIGNALS

AUD/USD is unwinding strongly from oversold conditions, which also coincided with an intraday DeMark buy signal (see lower chart). Even so, we expect this recovery to be short-lived and continue to hold our stop level at 1.0050 for the active model portfolio short position, which is still maintaining a risk-free bias. The bears must sustain below 1.0000 to further compound downside pressure on the rates multi-year uptrend and push back towards 0.9611.

200-DMA (1.0405) KEY ZONE

Elsewhere, the Aussie continues to weaken sharply, against the New Zealand dollar. Near-term price activity is mean reverting back into the 200day MA and we watch for further setbacks over the multi-day/week horizon. The Aussie dollar is also pairing back its mild recovery against the Japanese yen, while holding above the neck-line of its two-year distribution pattern.

AUD/USD daily chart, Bloomberg Finance LP

AUD/USD (60 MIN)

Watch for further downside scope into support at 72.00 which would signal further unwinding of global risk appetite.

RANGE BREAKOUT

DEMARK BUY SIGNAL

S-T TREND

L-T TREND

STRATEGY
SHORT 2: 1.0050, Obj: 0.9660/0.9380, Stop: 1.0050.

AUD/USD hourly chart, Bloomberg Finance LP

www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 7

GBP/JPY

DAILY TECHNICAL REPORT

19 December, 2011

Channels lower in a possible corrective structure.

GBP/JPY has been largely contained within a falling hourly channel for the majority of December. This structure is seen as being part of a corrective
200-day Average

phase with an eventual return to strength anticipated, potentially close to the 120.00 region. However, the recovery seen from the 116.84 low appears corrective in nature, suggesting scope for a return to 119.38 and then potentially 116.84. A minor break has taken place under the support of the hourly channel, reaching 120.30. This may now mark a short-term higher low for a fresh swing to the upside targeting both 122.64 and 122.23, before a potential lower high in the medium-term timeframe may develop. This would then

GBP/JPY daily chart, Bloomberg Finance LP

return focus back to the structure mentioned in the second bullet point.

GBP/JPY hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Await fresh signal.

www.migbank.com

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 8

EUR/JPY

DAILY TECHNICAL REPORT

19 December, 2011

Support anticipated close to 100.76.

EUR/JPY saw an extension lower in recent trade following the break under 1.3146 in EUR/USD, particularly in light of the recent static nature of USD/JPY.
200-day Average

We now anticipate a degree of support close to the 100.76 level, from where a recovery may take place As mentioned in prior reports, the medium-term recovery that we have already witnessed from 100.76 to 111.60 is viewed as the initial leg higher in a larger recovery structure. Even if a lower low were to be printed in the medium-term timeframe, an initial recovery from the 100.76 region is anticipated. With this in mind we

EUR/JPY daily chart, Bloomberg Finance LP

look to attempt longs just ahead of the key 100.76 level. Sustained price activity under this level will warn of a much larger continuation to the downside.

S-T TREND

L-T TREND

STRATEGY
Missed buy. Await New Setup.

EUR/JPY hourly chart, Bloomberg Finance LP

www.migbank.com

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 9

EUR/GBP

DAILY TECHNICAL REPORT

19 December, 2011

Retrace back towards old trend-line support sought.

EUR/GBP continues to witness short-term weakness. Although a move to test daily falling channel support near 0.8330 may develop, we prefer to wait for higher levels to sell. We await a re-test of the old trend-line support as resistance ahead of possible short positioning.
200-day Average

Also noted is that 1.3146 has now been broken in EUR/USD, weakening the longer-term outlook there. This may assist a short EUR/GBP bias going forward. An initial target for the current downswing in the daily timeframe is on the support of the previously mentioned falling channel, currently at 0.8330. As mentioned in prior reports, the recent six party central bank coordination

EUR/GBP daily chart, Bloomberg Finance LP

is in fact a warning sign and a clear weakness, suggesting scope for a credit contractionary phase. We continue to expect a continuation of rising yields in the Euro-Zone and it is within this environment that we see the potential for Sterling to be perceived as a safe haven.

S-T TREND

L-T TREND

STRATEGY
Sell limit 3 at 0.8510, Objs: 0.8395/0.8300/0.8142, Stop: 0.8615

EUR/GBP hourly chart, Bloomberg Finance LP

www.migbank.com

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 10

EUR/CHF
Messy sideways trade continues.
200-day Average

DAILY TECHNICAL REPORT

19 December, 2011

EUR/CHF is currently witnessing a flurry of price activity which has now triggered our filter level at 1.2226 (see below). It thus appears that the possibility of a break over the recent high at 1.2474 is receding. We reference the Italian 10 year sovereign yield on a daily basis in our USD/CHF commentary. A return to 7.000% and higher is building a recipe for disaster and, should it take place, may well instigate a period in which the Swiss Franc is sought as a safe haven irrespective of little to no yield pick-up. A parallel can be made with the negative yield that was available on short dated US paper during the last crisis. Sometimes return of capital is more important then return on capital.

EUR/CHF daily chart, Bloomberg Finance LP

The 1.2000 level is the only level that the SNB has suggested they will defend. There is thus likely to be a large cluster of stops under this level, which if tiggered, could herald a return towards the 1.0075 level.

S-T TREND

L-T TREND

EUR/CHF hourly chart, Bloomberg Finance LP

www.migbank.com

Sell Stop 3 at 1.2130, Objs: 1.2030/1.1526/1.1002, Stop: 1.2230.

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 11

GOLD
CYCLE FAVOURS DECLINE INTO $1300 & $1040-00
DEMARK SIGNAL WARNED OF GOLDS OVERBOUGHT CONDITIONS

DAILY TECHNICAL REPORT

19 December, 2011

DOUBLE TOP

Gold remains capped beneath its 200-day average

Golds remains capped beneath its 200-day average, which was recently

$1800 $1760

broken for the first time in 3 years. The move was triggered by a multi-month triangle pattern breakout (see both daily and intraday charts). Downside pressure remains heavy from inter-market weakness across related risk proxies such as EUR/USD and equity markets. Moreover, there

TREND CHANNEL
(12 YEARS)

$1600
$1532
200-DMA BROKEN FIRST TIME IN 3 YEARS! CONFIRMATION BENEATH $1532 TARGETS $1300

is still heightened risk for a much larger decline if we confirm a weekly close beneath $1600 and $1530 (swing low). A number of bargain hunting trend-followers will be watching this benchmark line in the sand for repeat support or a potential big squeeze lower into $1300 and perhaps even $1040-1000 (12-year channelfloor/see

DOWNSIDE: $1600 / $1530 / $1300 UPSIDE: $1670/ $1760 / $1800

top chart insert). Speculative (net long) flows also support this view having recently breached a key downside level which may threaten over 2 years of sizeable long gold positions. This will trigger a temporary, but dramatic setback that would ultimately offer a unique buying opportunity into summer 2012.

Gold daily and weekly charts, Bloomberg Finance LP

GOLD (60 MIN)

PATTERN BREAKOUT

Please select links for in-depth Gold coverage: Special Report Golds mountainous peak at riskbeneath $1600
COT NET LONG SPECULATOR POSITIONS SHARP DECLINE

VIDEO

Bloomberg Countdown

CNBC Squawk Box

MIG Bank Gold Webinar video

(BLOOMBERG & CNBC REPORTS)

WEAK RECOVERY
OVER 2 YEARS OF SIZEABLE LONG GOLD POSITIONS UNDER THREAT IF KEY LEVEL BREAKS

S-T TREND

L-T TREND

STRATEGY
SHORT 2: 1705, Obj: 1530, 1300, Stop: 1705

Gold intraday chart, with COT Liquidity, Bloomberg Finance LP

www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 12

SILVER
Gold/Silver "Mint" Ratio Silver (Daily)
DEMARK SELL SIGNALS

DAILY TECHNICAL REPORT

19 December, 2011

Weak bounce remains capped beneath $30.0000.

Silvers weak recovery from oversold conditions remains capped beneath key support at $30.0000. Only a sustained close below here would trigger a

13 YEAR LEVEL UNWINDING 70% FROM OVERSOLD TERRITORY

200 DMA (36.7945)

test of the previous swing low at $26.0700. Macro price structure continues to focus on the downside risks, following the major sell-off in September. Such a dramatic move traditionally produces volatile trading ranges. This allows the market to have enough time to recover and accumulate renewed buying interest.
KEY SUPPORT (26.0700)

Expect a large trading range to hold between $37.0000-26.0700 over the multi-week/month horizon, with downside macro risk into $21.5165 (61.8% Fib-1999 bull market) and $20.0000. This would still maintain silvers longterm uptrend and help offer a potential buying opportunity for the eventual

Spot Silver daily chart with Silver/Gold ratio, Bloomberg Finance LP

SILVER (60 MIN)

resumption higher. Continue to watch the gold-silver mint ratio (see top chart insert) which has now accelerated higher by 70%, suggesting further risk aversion over the next few weeks. This also helps explain recent divergences between gold and silver.

RANGE BREAKOUT

PSYCHOLOGICAL (30.0000)

WEAK RECOVERY

S-T TREND

L-T TREND

STRATEGY
SHORT 2: 34.1300, Obj: 26.0700/23.3400, Stop: 34.1300

Spot Silver hourly charts, Bloomberg Finance LP

www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 13

LEGAL TERMS

DAILY TECHNICAL REPORT

19 December, 2011

DISCLAIMER
No information published constitutes a solicitation or offer, or recommendation, or advice, to buy or sell any investment instrument, to effect any transactions, or to conclude any legal act of any kind whatsoever. The information published and opinions expressed are provided by MIG BANK for personal use and for informational purposes only and are subject to change without notice. MIG BANK makes no representations (either expressed or implied) that the information and opinions expressed are accurate, complete or up to date. In particular, nothing contained constitutes financial, legal, tax or other advice, nor should any investment or any other decisions be made solely based on the content. You should obtain advice from a qualified expert before making any investment decision. All opinion is based upon sources that MIG BANK believes to be reliable but they have no guarantees that this is the case. Therefore, whilst every effort is made to ensure that the content is accurate and complete, MIG BANK makes no such claim.

Limitation of liability
MIG BANK disclaims, without limitation, all liability for any loss or damage of any kind, including any direct, indirect or consequential damages.

Material Interests
MIG BANK and/or its board of directors, executive management and employees may have or have had interests or positions on, relevant securities.

Copyright
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Notes: Entries are in 3 units and objectives are at 3 separate levels where 1 unit will be exited. When the first objective (PT 1) has been hit the stop will be moved to the entry point for a near risk-free trade. When the second objective (PT 2) has been hit the stop will be moved to PT 1 locking in more profit. All orders are valid until the next report is published, or a trading strategy alert is sent between reports.

www.migbank.com

14

CONTACT

DAILY TECHNICAL REPORT

19 December, 2011

Howard Friend www.migbank.com Chief Market Strategist h.friend@migbank.com

Ron William Technical Strategist r.william@migbank.com

Bjioy Kar Technical Strategist b.kar@migbank.com

MIG BANK info@migbank.com www.migbank.com

14, rte des Gouttes dOr CH-2008 Neuchtel Tel.+41 32 722 81 00 15