2011 10-28 migbank-daily technical-analysis-report

DAILY TECHNICAL REPORT
28 October, 2011

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

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

EUR/USD  
RK
GBP/USD  
Awaiting Directional Confirmation.

Await fresh signal.

ET
USD/JPY   Awaiting New Buy Trade Setup.

USD/CHF   LONG 3 0.8600 0.9000/0.9200/0.9316 (Entered 28/10/2011) 0.8500

Ron William, CMT, MSTA
USD/CAD   Buy Stop 3 1.0275 1.0660/1.0850/1.1110 1.0150

AUD/USD   Awaiting New Sell Trade Setup.

GBP/JPY   Sell limit 3 123.15 121.60/118.50/116.50 124.40

EUR/JPY   SHORT 3 107.90 106.90/104.00/100.00 (Entered 28/10/2011) 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   Awaiting New Sell Trade Setup.

SILVER   Awaiting New Sell Trade Setup.
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 Broker14, 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 28 October, 2011

EUR/USD (Daily) BERMUDA TRIANGLE
Bullish recovery holds above 200-day MA (1.4101).
FAILED
BREAKOUTS

 EUR/USD’s short-term bullish recovery is holding steady above the long-
term 200-day MA at 1.4101, following the recent positive EU news. The
move has temporarily neutralised the larger bearish downtrend from April.

BREAKOUT ZONE  Failure to hold above the 200-day MA will warn of an emotionally charged
(1.4000)
bull-trap and ultimately a sharp downside reversal through 1.3799 (26th Oct
th
low) and 1.3653 (18 Oct low), with scope into 1.3146 (Oct swing low).

 Watch intermarket relationships across broad risk-related proxies such as
200-DMA the developed equity markets. The euro currently shares a high correlation
(1.4101)
TREND
2 YEARS
of 0.85% with the S&P500 which has just climbed to an 8-week high.

 Inversely, the USD Index is continuing to retrace (from its recent 6-month
EUR/USD daily chart, Bloomberg Finance LP highs) and is likely to find support at 74.10 and 73.40.
USD INDEX EUR 57.6%, JPY 13.6%, GBP 11.9% USD INDEX
200-DMA
CAD 9.1%, SEK 4.2%, CHF 3.6% (4 YEARS)  Speculative (net long) liquidity flows are also temporarily unwinding from
(75.75)
their recent spike highs (3 standard deviations from the yearly average).
This will remain strong and help resume the USD’s major bull-run from its
historic oversold extremes (momentum, sentiment and liquidity).
+10%
+27% +19% SO FAR

Special Report: EUR/USD ˝A Fall From Grace˝ ? Decline Targets 1.3770/1.3410. VIDEO
BREAKOUT ZONE DEMARK™
MIG Bank Webinar: “Why the US dollar is likely to gain up to 30% in 6-12 months.”
BUY SIGNAL
MIG Bank US Dollar Interview on Bloomberg
3 STD ABOVE
ONE YEAR
AVERAGE

TRIGGER
(15000)
+
13 KEY SUPPORT
DEMARK™ 9 (73.50-73.00)
EXTREME NET
COT LIQUIDITY US $ SHORT
BUY SIGNALS
- POSITIONS
S-T TREND L-T TREND STRATEGY
USD Index daily, weekly chart and COT Liquidity, Bloomberg Finance LP   Awaiting Directional Confirmation.

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

2

GBP/USD 28 October, 2011

Larger recovery back into 200-day MA (1.6137).

 GBP/USD is continuing a larger recovery phase back towards the 200-day
MA which is currently at 1.6137.

 However, the 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.
200-day MA
 A sustained break under 1.5632 is now required to increase the probability
of a lasting lower high.

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

GBP/USD hourly chart, Bloomberg Finance LP S-T TREND L-T TREND STRATEGY
  Await signal.

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

3

USD/JPY 28 October, 2011

USD/JPY
(Daily POST INTERVENTION USD/JPY still basing around its NEW all-time low.
1 YEAR) RETRACEMENT (PIR I)
 USD/JPY maintains a confluence of DeMark™ exhaustion bullish signals,
after yet another new post WWII record low which was carved out at 75.82.

QUAKE  These reversal signals are also following the second post intervention
SHOCK!
83.30 retracement in 2011, which is holding around a multi-week base pattern. It is
POST
G7
also worth noting that our volatility measures remain very low and continue
MOVE
HIGH to favour a major breakout over the short-term horizon.

82.00  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
POST
BOJ
of the preferred new structural bull-cycle into the all-important psychological
MOVE
HIGH level at 80.00, near 80.24 (post BOJ intervention II high).

80.24  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.
USD/JPY Weekly ENDING PIR II
(2007 – 2011) DIAGONAL Only a sustained weekly close below 76.25 will lead to a reassessment of
PATTERN the view and extend temporary weakness into 74.55.
BREAKOUT DEMARK™ BUY SIGNAL
TARGET AFTER NEW POST
WWII LOW (75.82) Please select the link below to sign up for our MIG Bank webinar on USD/JPY.
(88-85) 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.
MONTHLY DEMARK
BUY SIGNAL

USD/JPY daily, weekly chart, Bloomberg Finance LP
  Awaiting New Buy Trade Setup.


4

USD/CHF 28 October, 2011

Breaking below its long-term 200 day MA (0.8735).

 USD/CHF has now broken below its 200-day moving average which is
currently at 0.8735, having recently printed a lower high at 0.9083, following
200-day MA the recent break under 0.8881. 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 0.8927. 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.

 The recent 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
  LONG 3 at 0.8600, Objs: 0.9000/0.9200/0.9316, Stop: 0.8500


5

USD/CAD 28 October, 2011
USD/CAD (Daily) USD/CAD (Weekly)

August High Bears push back under the psychological 1.0000 level.
(1.0673)

 USD/CAD’s short-term price activity remains negative, as the bears push
back under the all-important psychological 1.0000 level (prior trading range).

 Only a sustained close beneath here will extend bearish setbacks into the
st
200-DMA
CONFIRMATION long-term 200-day MA at 0.9813 and 0.9726 (31 Aug low). Only a close
(0.9811) ABOVE 1.0680
OPENS LARGER beneath here will change the long-term positive view and encourage a sell
RECOVERY
trade setup in our model portfolio.

 Meanwhile, positive momentum needs to push above 1.0264 and 1.0400 to
rebuild the potential major upside reversal higher above the old resistance
DEMARK™ level at 1.0673 (August high & Congestion zone).
BUY SIGNAL

 A strong directional confirmation above here will open a much larger
USD/CAD daily, weekly chart, Bloomberg Finance LP
recovery into 1.0850 plus. This would extend the upside breakout from the
MAJOR RESISTANCE CHF/CAD (Daily)
REVERSAL
rate’s ending triangle pattern, which was part of a major Elliott Wave cycle.
PATTERN
 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 1.1265,
50%
(1.3570) following the dramatic price slide lower (triggered by the SNB intervention).
61.8%
50%
The cross-rate has now retraced more than half of its 2011 gains.
(1.3379) 200-DMA
(1.1488)
(1.3826)

61.8%
(1.0893)
200-DMA
(1.1265)

EUR/CAD (Daily) S-T TREND L-T TREND STRATEGY

EUR/CAD and CHF/CAD daily chart, Bloomberg Finance LP   Buy Stop 3: 1.0275, Objs:1.0660/1.0850/1.1110, Stop: 1.0150


6

AUD/USD 28 October, 2011

AUD/USD AUD/USD
(1 YEAR) DEMARK™
SELL SIGNALS (Weekly) Resistance at 1.0765 is likely to cap.

 AUD/USD’s explosive rally is currently unwinding from overbought

STRUCTURAL
conditions, ahead key resistance at 1.0765 (01st Sept high).
LEVEL

38.2%  This level is likely to cap gains back into the 200-day MA (1.0402) and
(0.9144)
3 YEAR
UPTREND potentially resume downside pressure on the rate’s multi-year uptrend.
50%
(0.8546) IS UNDER
th th
200-DMA
PRESSURE  The bears need to confirm beneath 1.0322 (26 Oct low) and 1.0188 (18
(1.0402) 61.8%
(0.7947) Oct low). A break here will unlock sharp setbacks into 1.0000.
KEY
ZONE
 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 1.2100.

 The Aussie dollar is also gaining against the Japanese yen, after pushing
AUD/USD daily, weekly chart, Bloomberg Finance LP
back above resistance at 80.00. Near-term support continues to hold at
AUD/NZD AUD/JPY DEMARK™ 13
(Daily) SELL SIGNAL th
(Daily) 77.63 (18 Oct low). A break here will resume downside scope into 76.70.

200-DMA
CAPS
BEAR
MKT

38.2%
(76.70) 200-
DMA
50% (83.15)
(72.58)

61.8%
(68.47) BREAKDOWN
ADDS TO
RISK
AVERSION

KEY SUPPORT
1.2319 / 1.2100 S-T TREND L-T TREND STRATEGY

AUD/NZD and AUD/JPY daily chart, Bloomberg Finance LP   Awaiting New Sell Trade setup.


7

GBP/JPY 28 October, 2011

Range bound short-term, favouring a return to 122.65.

 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
200-day MA 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 28 October, 2011

Testing the 107.68 level.
th
 EUR/JPY is currently tested the 107.68 (17 Oct high) level after pushing
higher from its range just above the 104.75/99 floor. Provided this floor is
200-day MA not breached, scope is seen for a fresh swing higher.

 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.

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

EUR/JPY hourly chart, Bloomberg Finance LP
  SHORT 3 at 107.90, Objs: 106.90/104.00/100.00, Stop: 109.00


9

EUR/GBP 28 October, 2011

Further swing higher anticipated towards 0.8886/85.

 EUR/GBP is still holding above its 200-day moving average, which is
currently at 0.8727.

 The rise from 0.8530 is viewed as being a corrective structure with scope for
200-day MA
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
EUR/GBP daily chart, Bloomberg Finance LP
shown).

 A move back over 0.8960 is required to neutralise our mild bearish bias, in a
generally rangebound environment.

EUR/GBP hourly chart, Bloomberg Finance LP
  Sell limit 3 at 0.8870, Objs: 0.8750/0.8580/0.8400, Stop: 0.8970


10

EUR/CHF 28 October, 2011

Fails to garner momentum close to channel resistance.

 EUR/CHF failed to garner momentum after meeting supply close to the
200-day MA
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 market’s 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.

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

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


11

GOLD 28 October, 2011

GOLD KEY TRIGGER LEVELS
DOWNSIDE: $1600 / $1530 UPSIDE: $1760 / $1844 RISK ZONE III
Risk of a larger decline beneath $1530.
DOUBLE

DEMARK™ SIGNAL
TOP
20%
WARNED OF GOLD’S  Gold remains bearish after its dramatic 20% price fall, which helped confirm
OVERBOUGHT SO FAR
CONDITIONS the extreme overbought conditions (marked by DeMark™ indicators). This
$1760
also timed a key cycle peak, ahead of that all-important $2000 glass-ceiling.
$1704
 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
$1600
positions.
34%
$1532
 In price terms, Gold’s latest 20% bearish slide is still worth less than the
200-DMA
BREAKOUT
NOT BROKEN largest average drawdown measured since the start of the yellow metal’s
IN 3 YEARS!
long-term bull market in 1999.

26%  There is heightened risk of a much larger decline if we confirm a weekly
CONFIRMATION BELOW $1530
UNLOCKS LARGER DECLINE close beneath $1600 and $1554-30 (200-day MA/swing low), which has not
INTO $1300 & $1040-1000 been breached in 3 years!
TREND
CHANNEL  A number of “bargain hunting” trend-followers will be watching this
(12 YEARS)
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
COT NET LONG
SPECULATOR
POSITIONS
offer a unique buying opportunity in the near future.

Please select links for in-depth Gold coverage:
I
25% Special Report “Gold’s mountainous peak at risk…beneath $1600” VIDEO
OVER 2 YEARS OF MIG Bank Gold Interview on CNBC Squawk Box MIG Bank Gold Webinar video
SIZEABLE LONG (CNBC & BLOOMBERG REPORTS)
GOLD POSITIONS
UNDER THREAT
IF KEY LEVEL BREAKS
II
Gold weekly, daily chart and COT Liquidity, Bloomberg Finance LP
  Awaiting New Sell Trade Setup.

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

SILVER 28 October, 2011

Silver HITS 1980 Spike High! DEMARK™
SELL SIGNAL 13 Key support at $26.0700.
Silver (Daily) I
DEMARK™
SELL SIGNALS  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 last April.

200 DMA
 The move was triggered following a DeMark™ exhaustion sell signal and
(36.5125) II
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.
KEY
SUPPORT  Such a dramatic move traditionally produces volatile trading ranges. This
(26.0700) 38.2%
(32.3135) allows the market to have enough time to recover and accumulate renewed
buying interest.
Gold/Silver "Mint" Ratio
50%  Expect a large trading range to hold between $37.0000-26.0700 over the
(26.9150)
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-
61.8%
(21.5165) term uptrend and help offer a potential buying opportunity for the eventual
resumption higher.
13 YEAR LEVEL

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

OVER 30 YEAR BASE PATTERN
BULL
MARKET
FROM
1999
Silver Monthly (since 1980)

Spot Silver daily, weekly chart and Gold/Silver “mint” ratio, Bloomberg Finance LP
  Awaiting New Sell Trade Setup.


13

LEGAL DAILY TECHNICAL REPORT
TERMS 28 October, 2011

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, to MIG BANK and/or its board of directors, executive management and employees may have or
buy or sell any investment instrument, to effect any transactions, or to conclude any legal act have had interests or positions on, relevant securities.
of any kind whatsoever.

The information published and opinions expressed are provided by MIG BANK for personal
Copyright
use and for informational purposes only and are subject to change without notice. MIG BANK All material produced is copyright to MIG BANK and may not be copied, e-mailed, faxed or
makes no representations (either expressed or implied) that the information and opinions distributed without the express permission of MIG BANK.
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 Notes: Entries are in 3 units and objectives are at 3 separate levels where 1
made solely based on the content. You should obtain advice from a qualified expert before unit will be exited. When the first objective (PT 1) has been hit the stop will be
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 28 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
r.william@migbank.com www.migbank.com Tel.+41 32 722 81 00
h.friend@migbank.com b.kar@migbank.com 15

2011 10-28 migbank-daily technical-analysis-report

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