DAILY TECHNICAL REPORT

28 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
EUR/USD GBP/USD USD/JPY USD/CHF
Ron William, CMT, MSTA

S-TERM
MULTI-DAY

L-TERM
MULTI-WEEK

STRATEGY/ POSITION

ENTRY LEVEL

OBJECTIVES/COMMENTS

STOP

Sell limit 3 Sell Stop 3 SHORT 2 SHORT 2 0.8425 1.2130 1705 34.1300

Await fresh signal. Await fresh signal. Await new buy trade setup above 80.00. Looking to sell. Awaiting new buy trade setup. Await fresh signal. Await fresh signal. Await new setup. 0.8325/0.8142/0.8050 1.2030/1.1526/1.1002 1530/1300 (Entered 12/12/2011) 26.0700/23.3400 (Entered 01/11/2011) 0.8525 1.2230 1705 34.1300

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

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

28 December, 2011

Support seen close to the 1.3000 level.

EUR/USD is unwinding mildly from oversold conditions, driven by shortcovering as the market adjusts to the break beneath 1.3146. Our cycle analysis successfully signalled increased volatility within the first two weeks of December across risk proxies, including the equity and commodity markets. Watch for a sustained close beneath 1.3000 (psychological level) to resume EUR/USDs multi-month downtrend into 1.2870 (2011 major low). 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 Inversely, the USD Index has extended its recovery higher to new 11month 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. US Dollar Interview on Bloomberg

USD Index daily chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Await fresh signal.

www.migbank.com

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

GBP/USD

DAILY TECHNICAL REPORT

28 December, 2011

Short-term a re-test of 1.5770/80 possible.

GBP/USD exhibits a short-term structure from 1.5409 that suggests a return back to 1.5770/80. However, a pullback would be expected

should a return to these levels be achieved, as the rise from 1.5423 is seen as being corrective in nature. A sustained push over 1.5770/80 will negate this corrective scenario. Italian ten year yields have eased back from the 7.000% level but this is seen as being a temporary respite, with an expectation that this yield will return to the 7.000% region and then on to re-test the high at 7.483%. This could lead to GBP/USD experiencing a degree of support given the negative structure that we are also seeing in EUR/GBP. 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 near 1.5100.

GBP/USD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Range bound trade likely to persist near-term.

www.migbank.com

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

USD/JPY

DAILY TECHNICAL REPORT

28 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). Confirmation beneath 77.25 (pivot level) would help trigger a third price retracement back to pre-intervention levels and potentially even a new post world war record low beneath 75.35. 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. USD/JPY daily chart, Bloomberg Finance LP 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

USD/JPY hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Awaiting Renewed Buy Trade Setup above 80.00.

www.migbank.com

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

USD/CHF
Tight range bound trade persists.

DAILY TECHNICAL REPORT

28 December, 2011

USD/CHF continues to trade largely sideways in the hourly timeframe. Focus remains on movements in EUR/CHF over coming days and particularly into next year. As EUR/CHF nears the 1.2000 level again the probability of intervention by the SNB will be heightened. Thus the near-term fate of USD/CHF may be determined by EUR/CHF.

As detailed in other parts of this report, there has been a return to the 7.000% region and higher in Italian 10 year yields, although today we are seeing a minor pullback, ahead of debt auctions today/tomorrow. Fresh highs are still anticipated in this maturity, with scope then for a minor pullback in yields, maintaining downside pressure on USD/CHF.

USD/CHF daily chart, Bloomberg Finance LP

Next year is also likely to see a return to focusing on rollover funding issues for the Italian economy. 10 year yields in Spain and Italy are currently trading at 5.084% and 6.767% versus 6.478% and 7.355%, before the US Dollar based swap agreement. These yields were trading at 5.384% and 7.103%

respectively on 27 December.

USD/CHF hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Looking to sell.

www.migbank.com

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

USD/CAD

DAILY TECHNICAL REPORT

28 December, 2011

Unwinding from intraday resistance at 1.0425.

USD/CAD is unwinding sharply from intraday resistance at 1.0425, which coincided with a short-term DeMark exhaustion signal. We prefer to wait for a strong directional confirmation higher before initiating a buy trade setup. A sustained break under 1.0220 now suggests further downside into 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 multimonth triangle pattern. USD/CAD daily chart, Bloomberg Finance LP 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. EUR/CAD has breached the base of an important multi-month distribution pattern. A sustained break beneath 1.3393-79 (19 Sept low/61.8% Fib), now signals an important breakdown into 1.3140 and provides substantial correlation pressure onto EUR/USD.
th

USD/CAD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Awaiting New Buy Trade Setup above 1.0425.

www.migbank.com

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

AUD/USD

DAILY TECHNICAL REPORT

28 December, 2011

Strong unwinding from oversold conditions.

AUD/USD is unwinding strongly from oversold conditions, which also coincided with an intraday DeMark buy signal. Although this recovery is sharp, it is likely to be short-lived as signaled by the DeMark signal. The bears must sustain below 1.0000 to further compound downside pressure on the rates multi-year uptrend and push back towards 0.9611. Elsewhere, the Aussie has weakened against the New Zealand dollar. Near-term price activity has mean reverted back over the 200-day MA and we watch for further setbacks over the multi-day/week horizon. AUD/USD daily chart, Bloomberg Finance LP 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. Watch for further downside scope into support at 72.00 which would signal further unwinding of global risk appetite.

AUD/USD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Await fresh signal.

www.migbank.com

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

GBP/JPY
Daily bear flag in focus for now.

DAILY TECHNICAL REPORT

28 December, 2011

GBP/JPY is potentially in the process of forming a bear flag in the daily timeframe. As anticipated a degree of resistance has been seen close to 123.00. A break under the 121.00 region will likely accelerate the downside momentum.

Although short-term weakness may be witnessed there is an expectation that GBP/JPY will see strong support on the approach to 116.84, should this region be revisited.

Longer-term it is anticipated that a much larger recovery will develop with scope for a return to 163.09 and then potentially on to 192.65. However, signs of basing are still not evident, with the bias still to the

GBP/JPY daily chart, Bloomberg Finance LP

downside in the near-term.

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
Short-term range trading persists.

DAILY TECHNICAL REPORT

28 December, 2011

EUR/JPY has entered into a tight range bound trading zone in the hourly timeframe, after finding interim support close to the 105.00 level recently.

We remain wary of the fact that the 1.3146 level has now been breached in EUR/USD warning of a larger swing lower in EUR/USD. This makes the possibility of a return to 100.76 more likely in EUR/JPY.

However, the structure present since 100.76 is suggestive of a further swing to re-test 111.60 over the medium-term. Thus, while trade is maintained above 101.05, a further leg higher is favoured.

EUR/JPY daily chart, Bloomberg Finance LP

A breakout of the tight hourly trading range is now sought, with a push higher favoured in line with the medium-term structural arguement given above.

This clash between structure and event risk in the Euro-Zone keeps us on the side lines for now.

Sustained under 100.76 will warn of a much larger continuation to the downside.

EUR/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 9

EUR/GBP
Lower high sought near 0.8425.

DAILY TECHNICAL REPORT

28 December, 2011

EUR/GBP is maintaining the initial support already seen near 0.8300. Scope is seen for a minor continuation of the short-term recovery higher. However, hourly structure remains bearish with a lower high sought versus 0.8613 for a fresh swing to re-test 0.8303.

If a sustained break under 0.8303 can be realised then an extension back to the 0.8068 0.8142 region would become viable. This view is assisted by the recent push under 1.3146 in EUR/USD, which may act to make EUR cross shorts easier to maintain.

Rising yields in the core Euro-Zone sovereign bond markets is a continued concern and one that may destabilise the FX markets going

EUR/GBP daily chart, Bloomberg Finance LP

forward. Within this environment Sterling may well be judged as a shortterm safe haven, further adding to the potential for downside pressure ahead.

EUR/GBP hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Sell limit 3 at 0.8425, Objs: 0.8325/0.8142/0.8050, Stop: 0.8525

www.migbank.com

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

EUR/CHF

DAILY TECHNICAL REPORT

28 December, 2011

Short-term structure conducive to an extension lower.

EUR/CHF is developing a structure in the hourly timeframe which is currently suggestive of a sizeable extension lower. It is anticipated that if a break under the recent low at 1.2170 can be achieved then momentum follow through may lead to the targeting of clustered stops under both 1.2123/30 and 1.2000. The Italian 10 year sovereign yield remains elevated, trading close to 7.000%. The new year will see further rollover funding, coupled with a likely bout of negative growth in Italy, an unhealthy combination. Thus, there is plenty of scope for the Swiss Franc to be sought once again as a safe haven. EUR/CHF daily and weekly charts, Bloomberg Finance LP The low yield available on Swiss Franc deposits is

unlikely to act as an impediment to it being demanded by investors.

EUR/CHF hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

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

DAILY TECHNICAL REPORT

28 December, 2011

Gold weakens after testing its 200-day average as resisance.

Gold has re-tested its 200-day average, which was recently 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 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 top chart insert). Gold daily and weekly charts, Bloomberg Finance LP 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.

Please select links for in-depth Gold coverage: Special Report Golds mountainous peak at riskbeneath $1600 Bloomberg Countdown CNBC Squawk Box
(BLOOMBERG & CNBC REPORTS)

VIDEO

MIG Bank Gold Webinar video

Gold hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

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

www.migbank.com

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

SILVER
Weak bounce retested $30.0000.

DAILY TECHNICAL REPORT

28 December, 2011

Silvers weak recovery from oversold conditions has tested key support turned resistance at $30.0000. A sustained close below here now triggers a 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.

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

Spot Silver daily chart, Bloomberg Finance LP

silvers long-term uptrend and help offer a potential buying opportunity for the eventual 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.

Spot Silver hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

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

www.migbank.com

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

LEGAL TERMS

DAILY TECHNICAL REPORT

28 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.

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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

28 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