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DAILY TECHNICAL REPORT 18 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 Sell Stop 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
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
EUR/CHF Buy limit 3 1.2205 1.2280/1.2380/1.2500 1.2120
GOLD SHORT 1 1805 1300 (Entered 12/09/2011) 1704
SILVER Sell Stop 3 31.8150 28.4300/26.0700/23.3400 33.0550
Ron William, CMT, MSTA
Bijoy Kar, CFA
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.
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 [email protected] www.migbank.com
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DAILY TECHNICAL REPORT 18 October, 2011
www.migbank.com
Sharp setbacks below resistance at 1.3937.
EUR/USD’s short-term recovery (worth almost 6%) has been capped below
resistance at 1.3937. As expected, Euro weakness has been further helped
by a broad sell-off across developed equity markets and correlated “risk”
proxies.
The bears still need to confirm 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 strong as most other popular “risk”
markets weaken from overcrowded uptrends. Short-term price activity
continues is now reversing back higher from 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
Sell Stop 3: 1.3660, Objs: 1.3340/1.3000/1.2860, Stop: 1.3910
EUR/USD
Ron William, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 454
EUR/USD
EUR/USD daily chart, Bloomberg Finance LP
USD Index daily and weekly chart, with COT liquidity, Bloomberg Finance LP
IMPULSIVE (WAVE 3)DECLINE TARGETS
1.3000 & 1.2870 TREND
2 YEARS (1.4000)
200-DMA (1.4078)
EUR/USD (Daily)
BIG LEVEL (1.4000)
BERMUDA TRIANGLE
BREAKOUTS FAILED
+
-
USD INDEX (4 YEARS)
DEMARK™BUY SIGNAL
+27% +19%
TRIGGER (15000)
COT LIQUIDITY
+10% SO FAR
3 STD ABOVEONE YEAR AVERAGE
EXTREME NET US $ SHORT POSITIONS
9 KEY SUPPORT (73.50-73.00)
USD INDEX
13
200-DMA (75.87)
DEMARK™ BUY SIGNALS
BREAKOUT ZONE
EUR 57.6%, JPY 13.6%, GBP 11.9%,
CAD 9.1%, SEK 4.2%, CHF 3.6%
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DAILY TECHNICAL REPORT 18 October, 2011
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Meets initial resistance close to the 38.2% retrace.
GBP/USD has tested the 38.2% retrace of the 1.6747-1.5272 fall over two
sessions and failed to close above it. This may signal the beginning of a
possible reversal back lower. However, further evidence is required ahead
of trade formulation.
We look to see if the region near 1.5781 can continue to contain price
from breaking yet higher. A stronger reversal pattern or a combination of
factors is required to activate a short bias. In particular a break under
1.5716 is required.
The longer-term price action has been largely range bound making
directional views hard to decipher. A continuation of range bound trade
would lead to an expectation of a larger recovery phase, back towards the
200 day moving average. Structure remains elusive currently, so standing
on the sidelines is deemed best for now.
It is anticipated that 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, given the large depreciation of Sterling versus the US
Dollar that took place in 2008.
S-T TREND L-T TREND STRATEGY
Await signal.
GBP/USD
Bijoy Kar, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 424
GBP/USD hourly chart, Bloomberg Finance LP
GBP/USD daily chart, Bloomberg Finance LP
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DAILY TECHNICAL REPORT 18 October, 2011
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USD/JPY is still 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).
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.
S-T TREND L-T TREND STRATEGY
Long 3 at 77.20, Obj: 80.20/81.50/83.30, Stop: 75.90
Ron William, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 426
USD/JPY
USD/JPY daily and weekly charts, Bloomberg Finance LP
WAVE 5
83.30
USD/JPY (Daily 1 YEAR)
QUAKE SHOCK!
POST INTERVENTION RETRACEMENT (PIR I)
POST G7
MOVE HIGH
82.00
PIR II
80.24
POST BOJ
MOVE HIGH
DEMARK™ BUY SIGNAL AFTER NEW POST WWII LOW (75.95)
MONTHLY DEMARK BUY SIGNAL
USD/JPY Weekly (2007 – 2011)
ENDING DIAGONAL
PATTERN
BREAKOUT TARGET
(88-85)
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DAILY TECHNICAL REPORT 18 October, 2011
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Under 0.9039 and 0.9123 warns of further weakness.
USD/CHF is consolidating under the old support of an hourly channel.
Scope is still seen for a continuation of weakness to potentially target the
0.8600 region where a higher low may form.
The expectation of further weakness is also supported by the structure
present since 0.9316, which is suggestive of a continuation of weakness.
This scenario will be weakened on a push over 0.9039 and then 0.9123.
It is also noted that the current trading region is close to the location of
the 50 week moving average, currently at 0.8951. Thus, a continuation of
weakness would also warn of a breakdown of the recent recovery
structure. However, it is noted that back under 0.7712 is required to
change the long-term bullish bias.
S-T TREND L-T TREND STRATEGY
Buy limit 3 at 0.8600, Objs: 0.9000/0.9200/0.9316, Stop: 0.8500
USD/CHF hourly chart, Bloomberg Finance LP
Bijoy Kar, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 424
USD/CHF
USD/CHF daily chart, Bloomberg Finance LP
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DAILY TECHNICAL REPORT 18 October, 2011
www.migbank.com
Bulls reverse higher from 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.
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.
S-T TREND L-T TREND STRATEGY
Buy Stop 3: 1.0275, Obj:1.0660/1.0850/1.1110, Stop: 1.0150
Ron William, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 454
USD/CAD
USD/CAD daily and weekly chart, Bloomberg Finance LP
EUR/CAD and CHF/CAD daily charts, Bloomberg Finance LP
MAJOR RESISTANCE
EUR/CAD (Daily)
50% (1.3570)
61.8%(1.3379)
200-DMA (1.3769)
61.8%(1.0893)
REVERSAL PATTERN
CHF/CAD (Daily)
200-DMA(1.1227)
50%(1.1488)
USD/CAD (Weekly)
CONFIRMATION ABOVE 1.0680
OPENS LARGERRECOVERY
DEMARK™ BUY SIGNAL
USD/CAD (Daily)
August High (1.0673)
200-DMA (0.9807)
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DAILY TECHNICAL REPORT 18 October, 2011
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Sharp reversal beneath 200-day MA at 1.0382.
AUD/USD’s bullish recovery has reversed sharply beneath the long-term
200-day MA which is currently holding at 1.0382. 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
1.2100.
The Aussie dollar is also weakening 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.
S-T TREND L-T TREND STRATEGY
Sell Stop 3: 1.0090, Objs: 0.9930/0.9620/0.9380, Stop: 1.0290
AUD/USD
Ron William, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 454
AUD/NZD and AUD/JPY daily charts, Bloomberg Finance LP
AUD/USD daily and weekly chart, Bloomberg Finance LP
38.2%(0.9144)
50% (0.8546)
STRUCTURAL LEVEL
61.8%(0.7947)
3 YEAR UPTRENDIS UNDER
PRESSURE
KEY ZONE
AUD/USD (1 YEAR)
(1.0935)
TD RISK (1.1102) DEMARK™
SIGNALS SELL
200-DMA (1.0381)
200-DMA CAPS BEAR MKT
AUD/NZD (Daily)
KEY SUPPORT 1.2319 / 1.2100
200-DMA
(83.28)
61.8% (68.47)
13
38.2% (76.70)
50% (72.58)
(Daily) DEMARK™AUD/JPY
SELL SIGNAL
BREAKDOWNADDS TO
RISK AVERSION
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DAILY TECHNICAL REPORT 18 October, 2011
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A further leg higher remains possible while above 120.34.
GBP/JPY met initial resistance yesterday close to 123.00. However while
above 120.34 a further test of 123.31 remains possible, where a lower high
would be favoured to form. Sustained under 120.34 in the hourly
timeframe will end hopes of a return towards 123.00.
In the meantime, 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
bias. Should this take place a larger corrective phase higher would then be
anticipated.
S-T TREND L-T TREND STRATEGY
Sell limit 3 at 123.15, Objs: 121.60/118.50/116.50, Stop: 124.40
GBP/JPY
GBP/JPY daily chart, Bloomberg Finance LP
Bijoy Kar, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 424
GBP/JPY hourly chart, Bloomberg Finance LP
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DAILY TECHNICAL REPORT 18 October, 2011
www.migbank.com
Further leg higher possible back to 107.68.
EUR/JPY met 107.68 yesterday from where a corrective swing lower is
currently taking place. Provided price can remain above the 104.96/99
floor there remains an expectation of a further swing higher to re-test the
108.03 key low. Given the structure present since 114.18 it is still favoured
that a lower high will form, with potential then 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.
Under the annual low would open up an extension to 97.50, ahead of
92.80, levels not seen since 2000.
S-T TREND L-T TREND STRATEGY
Sell limit 3 at 107.90, Objs: 106.90/104.00/100.00, Stop: 109.00
EUR/JPY hourly chart, Bloomberg Finance LP
Bijoy Kar, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 424
EUR/JPY daily chart, Bloomberg Finance LP
EUR/JPY
10
DAILY TECHNICAL REPORT 18 October, 2011
www.migbank.com
Strength towards 0.8886/85 ahead of potential supply.
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. As mentioned in recent reports, 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).
S-T TREND L-T TREND STRATEGY
Sell limit 3 at 0.8870, Objs: 0.8750/0.8580/0.8400, Stop: 0.8970
EUR/GBP hourly chart, Bloomberg Finance LP
EUR/GBP daily chart, Bloomberg Finance LP
EUR/GBP
Bijoy Kar, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 424
11
DAILY TECHNICAL REPORT 18 October, 2011
www.migbank.com
Test of hourly channel support remains possible.
Long strategy raised to 1.2205.
EUR/CHF has once again lapsed into a tight hourly range, with a break-out
now sought. An eventual re-test of 1.2435 is expected, however, a test of
hourly channel support cannot be ruled out near-term. Medium-term,
scope is seen for a test of the region between 1.2500 and 1.3000, given
the sustained move over the 200 day moving average.
Immediate focus is on the 50 week moving average (currently at 1.2452).
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.
A sustained move under 1.2024 will alter our near-term bullish bias.
S-T TREND L-T TREND
Buy limit 3 at 1.2205, Objs: 1.2280/1.2380/1.2500, Stop: 1.2120.
EUR/CHF daily chart, Bloomberg Finance LP
EUR/CHF
EUR/CHF hourly chart, Bloomberg Finance LP
Bijoy Kar, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 424
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DAILY TECHNICAL REPORT 18 October, 2011
www.migbank.com
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.
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)
S-T TREND L-T TREND STRATEGY
SHORT 1: 1805, Objs: 1300. Stop: 1704
GOLD
Gold, weekly, daily chart and COT Liquidity measures, Bloomberg Finance LP
Ron William, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 454
TREND CHANNEL (12 YEARS)
I
RISK ZONE III
BIGGEST DRAWDOWNS 34% (2008) 26% (2006) 25% (1999) AVERAGE = 28%
26%
34%
20% SO FAR
25%
II
COT NET LONG SPECULATOR POSITIONS
OVER 2 YEARS OFSIZEABLE LONG
GOLD POSITIONSUNDER THREAT
IF KEY LEVEL BREAKS
200-DMANOT BROKEN IN 3 YEARS!
RISK (1935)
DEMARK™ SIGNAL WARNED OF GOLD’S OVERBOUGHT CONDITIONS WHICH LED TO A $200 DROP IN 3 DAYS!
BREAKOUT
$1704
DOWNSIDE:
$1600
$1600 / $1530 UPSIDE: $1935 / $2000GOLD KEY TRIGGER LEVELS
$1532
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DAILY TECHNICAL REPORT 18 October, 2011
www.migbank.com
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.
S-T TREND L-T TREND STRATEGY
Sell Stop 3: 31.8150, Obj: 28.4300/26.0700/23.3400, Stop: 33.0550
SILVER
Spot Silver monthly, daily chart and gold-silver “mint” ratio, Bloomberg Finance LP
Ron William, Technical Strategist, E-mail: [email protected], Phone: +41 32 7228 454
BULL MARKET
FROM 1999
Silver Monthly (since 1980)
13
61.8% (21.5165)
38.2%(32.3135)
50%(26.9150)
I
30 YEAR
II
OVER BASE PATTERN
Silver HITS 1980 Spike High! DEMARK™ SIGNALSELL
13 YEAR LEVEL
UNWINDING 67% FROM OVERSOLD TERRITORY
Gold/Silver "Mint" Ratio
KEY SUPPORT (26.0700)
DEMARK™ SIGNAL
Silver (Daily) SELL
200 DMA(36.5125)
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DAILY TECHNICAL REPORT 18 October, 2011
www.migbank.com
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
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.
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.
LEGAL TERMS
15
DAILY TECHNICAL REPORT 18 October, 2011
www.migbank.com Howard Friend Chief Market Strategist [email protected] [email protected]
Technical Strategist Bjioy Kar
CH-2008 Neuchâtel Tel.+41 32 722 81 00
14, rte des Gouttes d’Or
www.migbank.com
MIG BANK [email protected] Technical Strategist
Ron William
CONTACT