DAILY TECHNICAL REPORT

20 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. Possibly looking to sell. Awaiting New Buy Trade Setup.

1.3140

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

SHORT 2

1.0050

0.9660/0.9380 (Entered 13/12/2011) Await fresh signal. Missed buy. Await new setup.

1.0050

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

20 December, 2011

EUR/USD (Daily)

BERMUDA TRIANGLE

FAILED
BREAKOUTS

Short-covering around the key 1.3000 level.

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 (1.4047)

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
11 MONTH HIGH

highs, (a move worth over 10% from the summer 2010 lows). Speculative (net long) liquidity flows are 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

US Dollar Interview on Bloomberg

200-DMA (75.93)

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

DAILY TECHNICAL REPORT

20 December, 2011

Short-term, long positioning favoured.

GBP/USD has broken over the resistance of the hourly falling channel that had been containing price since the beginning of the month. This may now mark the initiation of a fresh leg higher back towards 1.5780 initially. The movement of 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 trading close to 7.00%. Daily structure is also suggestive of a return to test 7.00% 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. Failure to remain above 1.5423 will see an immediate target at 1.5272 and GBP/USD daily chart, Bloomberg Finance LP then potentially trend-line support at 1.5110.

GBP/USD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Biased towards long positions in the very short-term.

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

20 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

DEMARK SELL SIGNALS

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

KEY PIVOT LEVEL (77.30) TRIGGERS POST INTERVENTION RETRACEMENT

Webinar: USD/JPYs Long-Term Structural Change Media Reports: CNBC / Squawk Box & Bloomberg

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

20 December, 2011

Strength from 0.8568 now likely reaching completion.

USD/CHF has weakened ever since meeting resistance close to 0.9550. This initial bout of weakness may now mark the end of the rising phase from 0.8568. A return back towards the 200 day moving average is possible from current levels. The yield on Italian 10 year sovereign debt tested 7.000% again yesterday. A return to this level is anticipated ahead of a push to 7.500% before completion of the recent rising phase off 5.758%. This is likely to cause the Swiss Franc to be deemed as a safe haven once again, despite the low yield available on Franc deposits. In order to maintain a focus on the Spanish and Italian sovereign markets USD/CHF daily chart, Bloomberg Finance LP we keep note of the 10 year yields in both of these markets, with these measures currently trading at 5.107% and 6.641% versus 6.478% and 7.355%, before the agreement. Thus Spanish debt is experiencing a

stronger positive affect, in contrast to the Italian market which remains elevated. The funding needs of the Italian government will return in the early part of next year as large tranches of debt will need to be rolled over.

USD/CHF hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Possibly looking to sell.

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

20 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.

CONFIRMATION ABOVE 1.0680 OPENS LARGER RECOVERY

DEMARK BUY SIGNAL

200-DMA (0.9885)

The move is continuing to look weak, within an intraday consolidation pattern (see lower chart) and we prefer to wait for a strong directional confirmation higher before initiating a buy trade setup.

Until then, keep a watchful eye on support around 1.0300. Beneath here would trigger a temporary breakout into 1.0220 and perhaps even 1.0000. Meanwhile, the bulls need to push back above 1.0425 and 1.0524 (25 Nov swing high), in order to trigger a larger breakout from the rates multi-month triangle pattern. USD/CAD daily chart, Bloomberg Finance LP
USD/CAD (60 MIN)
DEMARK SELL SIGNAL

In terms of the big picture, a directional confirmation above 1.0680 is still

DEMARK SIGNAL KEY RESISTANCE (1.0425)

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). EUR/CAD is retesting the base of an important multi-month distribution

BREAKOUT PATTERN KEY SUPPORT (1.0220)

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) DEMARK SELL SIGNALS

DAILY TECHNICAL REPORT

20 December, 2011

Strong unwinding from oversold conditions.

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
200-DMA (1.0405)

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.

AUD/USD
(Weekly)
38.2% STRUCTURAL LEVEL

(0.9144)
50%

(0.8546)
61.8%

(0.7947)

3 YEAR UPTREND UNDER PRESSURE

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.
BREAKOUT ZONE

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

20 December, 2011

Breaks over falling hourly channel resistance.

GBP/JPY has broken over the resistance of a falling hourly channel, approaching the resistance of this structure in current trade. This level lies near 121.60. A break over 122.23 is required to confirm 120.30 as a higher low. In the short-term a further leg higher is anticipated in the rise from 119.38. However, looking at medium-term structure, suggests that the recovery seen from the 116.84 low is corrective in nature. This suggests scope for a return to 119.38 and then potentially 116.84. If a break over 122.23 can be realised, an eventual lower high would be sought, in line with the medium-term structure that we have highlighted in GBP/JPY daily chart, Bloomberg Finance LP the bullet point above.

GBP/JPY hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Sell strategy removed. 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

20 December, 2011

Breaks higher from extreme range bound conditions.

EUR/JPY has met short-term support close to the key long-term low at 100.76, reaching 101.05 so far, on a mid-market basis. We have decided to remove our buy strategy as it marginally failed to get filled and a re-visit to the same region will warn of a continuation instead of a region of support. However, 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 and thus, while trade is maintained above 101.05 a further leg higher is favoured. We await a sustained resolution of the extreme range trading conditions EUR/JPY daily chart, Bloomberg Finance LP before formulating fresh strategy. Sustained under 100.76 will warn of a much larger continuation to the downside.

S-T TREND

L-T TREND

STRATEGY
Await fresh signal.

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
Approaches daily channel support.

DAILY TECHNICAL REPORT

20 December, 2011

EUR/GBP remains weak in both the short and long-term timeframes. We note that price is now approaching the support of the daily channel that has contained the pair for the last 5/6 months. This potential support level lies near 0.8320 and constitutes a near-term target. However, we await a re-test of the old trend-line support as resistance ahead of possible short positioning. Short positioning in EUR/GBP may not experience as many false breaks going forward, due to the clear break under 1.3146 that has been witnessed in EUR/USD in recent trade. As detailed in other parts of this report, rising yields in the core Euro-Zone EUR/GBP daily chart, Bloomberg Finance LP sovereign bond markets is a continued concern and one that may destabilise the FX markets going forward. Within this environment Sterling may well be judged the best of a bad bunch and to a degree be seen as a short-term 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

DAILY TECHNICAL REPORT

20 December, 2011

Downside bias remains, while within a larger range.

EUR/CHF has broken under our filter level at 1.2226 leading to us changing our sell strategy to a sell stop, as detailed below. We also note that the 50 week moving average has managed to contain the market on the upside, warning that the larger down-trend may not be over. The Italian 10 year sovereign yield continues to meet resistance close to the 7.000% level. A break over this level will place funding stresses on the Italian economy and may lead to the Swiss Franc being sought once again as a safe haven. As mentioned in prior reports, the low yield available on Swiss Franc deposits is unlikely to act as an impediment to it being sought as a safe haven. EUR/CHF daily and weekly charts, 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 triggered, 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

20 December, 2011

DOUBLE TOP

Gold remains capped beneath its 200-day average

Gold 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

GOLD KEY LEVELS

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

VIDEO

COT NET LONG SPECULATOR POSITIONS

Bloomberg Countdown
SHARP DECLINE WEAK RECOVERY

CNBC Squawk Box

MIG Bank Gold Webinar video

(BLOOMBERG & CNBC REPORTS)

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

20 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 (36.7345)

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

20 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
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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
All material produced is copyright to MIG BANK and may not be copied, e-mailed, faxed or distributed without the express permission of MIG BANK.

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

20 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