2011 10-21 migbank-daily technical-analysis-report

DAILY TECHNICAL REPORT
21 October, 2011

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

M S-TERM
MULTI-DAY
L-TERM
MULTI-WEEK
STRATEGY/
POSITION
ENTRY
LEVEL
OBJECTIVES/COMMENTS STOP

EUR/USD SHORT 3 1.3660 1.3340/1.3000/1.2860 1.3910

GBP/USD Await fresh signal.

USD/JPY LONG 3 77.20 80.20/81.50/83.30 (Entered 25/08/2011) 75.90

USD/CHF Buy limit 3 0.8600 0.9000/0.9200/0.9316 0.8500
Ron William, CMT, MSTA
USD/CAD Buy Stop 3 1.0275 1.0660/1.0850/1.1110 1.0150

AUD/USD Sell Stop 3 1.0090 0.9930/0.9620/0.9380 1.0290

GBP/JPY Sell limit 3 123.15 121.60/118.50/116.50 124.40

EUR/JPY Sell limit 3 107.90 106.90/104.00/100.00 109.00

EUR/GBP Sell limit 3 0.8870 0.8750/0.8580/0.8400 0.8970
Bijoy Kar, CFA
EUR/CHF Await fresh signal.

GOLD SHORT 1 1805 1300 (Entered 12/09/2011) 1704

SILVER SHORT 3 31.8150 28.4300/26.0700/23.3400 33.0550
WINNER BEST SPECIALIST RESEARCH

DISCLAIMER & DISCLOSURES
Please read the disclaimer and the
disclosures which can be found at 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
the end of this report
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.

MIG BANK / Forex Broker 14, rte des Gouttes d’Or CH-2008 Neuchâtel Switzerland
Tel +41 32 722 81 00 Fax +41 32 722 81 01 info@migbank.com www.migbank.com

EUR/USD DAILY TECHNICAL REPORT
EUR/USD 21 October, 2011

1.3937 caps for now.

EUR/USD’s short-term recovery (worth almost 6%) has been capped below
resistance at 1.3937.

Bears still need a meaningful confirmation beneath that all-important
psychological level at 1.3000 to unlock further scope into 1.2860 (near
2011 low) and even further.

Key resistance remains at 1.3937 (15th Sept high), which is near the
previous breakout zone at 1.4000. Confirmation above here will neutralise
the status quo.

Inversely, the US dollar remains above the 200 day moving average as
most other popular “risk” markets weaken from overcrowded uptrends.
EUR/USD daily chart, Bloomberg Finance LP Short-term price activity has found initial support close to the previous
breakout zone at 76.40.

Speculative (net long) liquidity flows are maintaining their spike above our
trigger level of 15000 contracts and is holding at 3 standard deviations
from the yearly average. This will help sustain the bull-run from 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.”
MIG Bank US Dollar Interview on Bloomberg

S-T TREND L-T TREND STRATEGY
USD Index daily chart, Bloomberg Finance LP
Short 3 at 1.3660, Objs: 1.3340/1.3000/1.2860, Stop: 1.3910

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

2

GBP/USD 21 October, 2011

Under 1.5632 to strengthen current mild bearish bias.

GBP/USD continues to consolidate just under the 38.2% retrace of the
1.6747-1.5272 fall. A sustained break under 1.5632 is now required to
increase the probability of a lasting lower high near this key retrace.

Strategy is still hampered by a lack of reliable structure, largely due to the
range bound nature of the market in the medium-term time frame. Should
this continue then a larger recovery phase, back towards the 200 day
moving average would come back into focus. Remaining neutral is
deemed best for now.

GBP/USD has already experienced a large devaluation versus the US
Dollar, therefore any further strengthening in the US Dollar may not see
GBP/USD daily chart, Bloomberg Finance LP the full participation of GBP/USD. Instead GBP/USD is favoured to remain
stronger then most.

GBP/USD hourly chart, Bloomberg Finance LP
Await signal.

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

3

USD/JPY 21 October, 2011

USD/JPY is possibly basing around its all-time low.

USD/JPY is maintaining a confluence of DeMark™ exhaustion bullish
signals, after the new post WWII record low which was carved out at 75.95.

These reversal signals are also following the second post intervention
retracement in 2011, which is holding around a multi-week base pattern. It
is also worth noting that our volatility measures remain very low and
continue to favour a major breakout over the short-term horizon.

The medium/long-term view remains bullish, watching for a sustained move
above our initial upside trigger level at 77.68. This would offer a
resumption of the preferred new structural bull-cycle into the all-important
psychological level at 80.00, near 80.24 (post BOJ intervention II high).
USD/JPY daily chart, Bloomberg Finance LP
Keep in mind that such a scenario would help reactivate the longer-term
technical bias, including prior monthly DeMark™ exhaustion signals, within
the ending diagonal pattern, which was part of a major Elliott Wave cycle.
Only a sustained weekly close below 76.25 will lead to a reassessment of
the view and extend temporary weakness into 74.55.

Please select the link below to sign up for our MIG Bank webinar on USD/JPY.
This will feature an update to our previous Special Report
USD/JPY’s Long‐Term Structural Change (Wednesday, November 02nd – 15:00‐15:45 GMT).
‐ What do long‐term cycles tell us about the future of USD‐JPY?
‐ How do event shocks and Central Bank Interventions impact the market?
‐ Safe‐Haven Flows: A wave of change.
‐ High‐Probability Trading Strategies.

USD/JPY weekly chart, Bloomberg Finance LP
Long 3 at 77.20, Objs: 80.20/81.50/83.30, Stop: 75.90


4

USD/CHF 21 October, 2011

Lower high in place at 0.9083.

USD/CHF appears to have printed a lower high at 0.9083 following the
break under 0.8881 yesterday. While under 0.9123 a continuation of this
weakness is favoured.

It is also noted that the current trading region is close to the location of
the 50 week moving average, at 0.8949. Thus, a continuation of weakness
would also warn of a breakdown of the recent recovery structure.
However, back under 0.7712 is required to change the long-term bullish
bias.

Today’s break lower also opens up the potential for a further extension
towards 0.8600, where a return to a bullish bias would become attractive

USD/CHF daily chart, Bloomberg Finance LP again.

USD/CHF hourly chart, Bloomberg Finance LP S-T TREND L-T TREND STRATEGY

Buy limit 3 at 0.8600, Objs: 0.9000/0.9200/0.9316, Stop: 0.8500


5

USD/CAD 21 October, 2011

Bulls meet initial support close to the psychological 1.0000 level.

USD/CAD bulls are reversing higher from that all-important 1.0000 level
(psychological level and prior trading range).

Positive momentum needs to push above 1.0400 to extend the recovery
higher above the old resistance level at 1.0673 (August high & Congestion
zone).

A strong directional confirmation above here will open a much larger
recovery into 1.0850 plus. This would extend the upside breakout from the
rate’s ending triangle pattern, which was part of a major Elliott Wave cycle.

Meanwhile, only a sustained close beneath 1.0100 will extend bearish
setbacks into next the support level at 0.9750.
USD/CAD daily chart, Bloomberg Finance LP
Elsewhere, EUR/CAD is extending above its 200-day MA, within a large
multi-month trading range. Key resistance continues to hold at 1.4379
(June swing high), which has for some time marked a strong distribution
pattern.

CHF/CAD is retesting its support nearby the 200-day MA at 1.1227,
following the dramatic price slide lower (triggered by the SNB
intervention). The cross-rate has now retraced more than half of its 2011
gains.

USD/CAD weekly chart, Bloomberg Finance LP
Buy Stop 3: 1.0275, Objs:1.0660/1.0850/1.1110, Stop: 1.0150


6

AUD/USD 21 October, 2011

Remains beneath 200-day MA at 1.0384.

AUD/USD’s bullish recovery has reversed beneath the long-term 200-day
MA which is currently holding at 1.0385. Expect this area to cap further
into the rate’s psychological level at 1.0000.

In terms of the big picture, AUD/USD’s multi-year uptrend remains under
pressure since the previous breakdown. The bears need to confirm
beneath 0.9388 (04th Oct low & structural level) to unlock a much larger
decline into 0.9220 and 0.9144 (38.2% Fib-2008 uptrend).

Elsewhere, the Aussie dollar remains stable against the New Zealand
dollar. The pair is still locked within its new bear cycle structure while it
holds beneath its 200-day MA. Key support can be found at 1.2320 and
AUD/USD daily chart, Bloomberg Finance LP 1.2100.

The Aussie dollar has stabilised against the Japanese yen, after failing into
resistance at 79.92. Watch for a resumption of the major downtrend from
spring 2011. Strong downside scope will signal further unwinding of global
risk appetite.

AUD/USD weekly chart, Bloomberg Finance LP
Sell Stop 3: 1.0090, Objs: 0.9930/0.9620/0.9380, Stop: 1.0290


7

GBP/JPY 21 October, 2011

Range bound short-term, with a return to 122.65 favoured.

GBP/JPY saw a minor break under 120.34 which failed to hold, reaching
120.00. This is suggestive of the potential for a further recovery leg higher
to test the region near 123.00.

The structure present since 116.84 is deemed corrective, with scope for a
final swing higher to complete this corrective phase. However, a sustained
push under the recent low at 120.00 will warn of resumption of weakness
back towards the floor near 117.00. However, an eventual return to
116.84/98 is expected, below which would open up an extension towards
115.00 immediately.

A sustained break over 123.31 is required to change the current bearish

GBP/JPY daily chart, Bloomberg Finance LP bias. Should this take place a larger corrective phase higher would then be
anticipated.

GBP/JPY hourly chart, Bloomberg Finance LP
Sell limit 3 at 123.15, Objs: 121.60/118.50/116.50, Stop: 124.40


8

EUR/JPY 21 October, 2011

Consolidates above the 104.96/104.99 floor.

EUR/JPY continues to range just above the 104.96/99 floor, following
initial support over the last few sessions. Provided this floor is not
breached, scope is seen for a fresh swing higher to re-test the 107.68 level.
However, the larger structure present since 114.18 favours the formation
of a lower high close to 108.03, for a return to re-test 100.76.

Failure to hold under 108.03 will warn of a larger recovery structure,
negating our medium-term bearish bias. Also, if a push over 108.03 can be
sustained this will bring into focus a potential false break lower out of a
falling channel in the daily timeframe.

Under the annual low would open up an extension to 97.50, ahead of
EUR/JPY daily chart, Bloomberg Finance LP 92.80, levels not seen since 2000.

EUR/JPY hourly chart, Bloomberg Finance LP


9

EUR/GBP 21 October, 2011

Further swing higher anticipated towards 0.8886/85.

EUR/GBP continues to trade close to the 200 day moving average over
recent sessions. However, the bigger picture is dominated by the recent
failure to hold over the key high at 0.8672. Thus the rise from 0.8530 is
viewed as being a corrective structure with scope for a lower high to form
closer to the old 0.8886/85 double top. So, although further short-term
strength may follow, supply is favoured to manifest near 0.8885.

Should this move be realised, it would also take us close to the upper end
of the recent trading range. There is an increased probability of general
range bound trade, thus short entry at higher levels is also supported by
the potential of a return to a period similar to that between 2003 and 2007
(not shown).
EUR/GBP daily chart, Bloomberg Finance LP
Back over 0.8960 is required to neutralise our mild bearish bias, in a
generally rangebound environment.

EUR/GBP hourly chart, Bloomberg Finance LP


10

EUR/CHF 21 October, 2011

Fails to garner momentum close to channnel resistance.

Long stopped. Await fresh signal.

EUR/CHF failed to garner momentum after meeting supply close to the
resistance of an hourly rising channel. The subsequent weakness is
currently testing the support of this same structure. A failure to find
support here would warn of a larger fall back down to the 1.2000 level.

Although bullish for the time being, it is expected that the 1.2500-1.3000
zone may limit the current recovery phase from 1.0075. It is anticipated
that the markets willingness to trade with the bias of the SNB may exhaust
should this trading region be met, as further gains in this cross are likely to
become more dependent on economic releases.

EUR/CHF daily chart, Bloomberg Finance LP A sustained move under 1.2024 will alter our near-term bullish bias.

S-T TREND L-T TREND
EUR/CHF hourly chart, Bloomberg Finance LP
Long stopped. Await fresh trading signal.


11

GOLD 21 October, 2011

Risk of a larger decline beneath $1600.

Gold remains bearish after its dramatic 20% price fall, which helped
confirm the extreme overbought conditions (marked by DeMark™
indicators). This also timed a key cycle peak, ahead of that all-important
$2000 glass-ceiling.

Most concerning is that speculative (net long) flows have recently breached
a key downside level which may threaten over 2 years of sizeable long gold
positions.

In price terms, Gold’s latest 20% bearish slide is still worth less than the
largest average drawdown measured since the start of the yellow metal’s
long-term bull market in 1999.

There is heightened risk of a much larger decline if we confirm a weekly
close beneath $1600 and $1547 (200-day MA), which has not been
breached in 3 years!

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. Remember, this would
still offer a unique buying opportunity in the near future.

Gold, weekly chart, Bloomberg Finance LP
Please select links for in-depth Gold coverage:

Special Report “Gold’s mountainous peak at risk…beneath $1600” VIDEO
MIG Bank Gold Interview on CNBC Squawk Box MIG Bank Gold Webinar video
(CNBC & BLOOMBERG REPORTS)


SHORT 1: 1805, Obj: 1300. Stop: 1704

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

SILVER 21 October, 2011

Key support at $26.0700.
Silver’s latest price capitulation is a painful reminder to the investment
community that lightning can strike twice. Note, this marks the second
time silver has crashed, following its 30% fall from April this year.

The move was triggered following a DeMark™ exhaustion sell signal and
has now wiped out almost 50% of silver’s prior gains (taken from Silver’s
all-time high at 49.7900) which was last seen in 1980.

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 silver’s long-
term uptrend and help offer a potential buying opportunity for the
eventual resumption higher.

Continue to watch the gold-silver “mint” ratio which has now accelerated
higher by 67%, suggesting further risk aversion over the next few weeks.

Spot Silver, daily chart, Bloomberg Finance LP


Short 3 at 31.8150, Objs: 28.4300/26.0700/23.3400, Stop: 33.0550


13

LEGAL DAILY TECHNICAL REPORT
21 October, 2011
TERMS
Limitation of liability

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

Material Interests
No information published constitutes a solicitation or offer, or recommendation, or advice, MIG BANK and/or its board of directors, executive management and employees may have
to buy or sell any investment instrument, to effect any transactions, or to conclude any legal or have had interests or positions on, relevant securities.
act of any kind whatsoever.
Copyright
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 All material produced is copyright to MIG BANK and may not be copied, e-mailed, faxed or
BANK makes no representations (either expressed or implied) that the information and distributed without the express permission of MIG BANK.
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 Notes: Entries are in 3 units and objectives are at 3 separate levels where 1
decisions be made solely based on the content. You should obtain advice from a qualified unit will be exited. When the first objective (PT 1) has been hit the stop will be
expert before making any investment decision. moved to the entry point for a near risk-free trade. When the second objective

All opinion is based upon sources that MIG BANK believes to be reliable but they have no (PT 2) has been hit the stop will be moved to PT 1 locking in more profit. All
guarantees that this is the case. Therefore, whilst every effort is made to ensure that the orders are valid until the next report is published, or a trading strategy alert is
content is accurate and complete, MIG BANK makes no such claim. sent between reports.

www.migbank.com

14

CONTACT 21 October, 2011

Howard Friend Ron William MIG BANK 14, rte des Gouttes d’Or
www.migbank.com Bjioy Kar
Chief Market Strategist Technical Strategist info@migbank.com CH-2008 Neuchâtel
Technical Strategist
h.friend@migbank.com r.william@migbank.com www.migbank.com Tel.+41 32 722 81 00
b.kar@migbank.com 15

2011 10-21 migbank-daily technical-analysis-report

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