This report went out to Trading Market Signal members earlier: 28th May 2010

Currencies

Considering the Euro continued its decline the Sterling held up better against the dollar in which it is currently moved higher and above the 145 mark. Once again we are fighting with this mark and for anything significant to occur out of this range the 145 mark must be conquered to avoid downside. The TMS Long at 14260 is gaining more than 250 points. The entry by the TMS system was excellent but no progress can be made until we close above 14549. Well done to anyone who entered in again or added to the existing long as an appreciation for support at 14250 was shown.

The Sterling powered ahead and gave a close above 145 and by doing do broke out from the tight range we had been in for the past 10 days. The very short term trend is now trying to turn upwards and the TMS system remains long. Unfortunately all is not yet conquered - For the Sterling to confirm its break away we need confirmation from the market in which it must hold 145 today. Also just because we have broken out of the tight range does not mean we'll be flying straight up for the moment as the Gbp/usd must break above 146 and more importantly 14660 - The level from where this 'U.K. election' decline started.

The Euro was weaker for the majority of the session on Wednesday and with its decline it dragged the U.S. stock markets south. The positive aspect is that we've turned around from support and we haven't breached the low of 12144 although we came within ticks away. Currently the Euro is hovering above 123. If this is a significant appreciation from support then we would expect 124 to be tackled today, if it isn't then moving lower again would be likely. The TMS system is refusing to budge from the long given at 12170 and we would like to add to any dips as frankly it seems like a bottom making process is occurring in which we will simply zoom off to the upside. For now the Euro must stabilise in light of today's turnaround advance from support. The double bottom chart is still very much strongly intact.

The Euro managed to just about stick with its advance after it started to pull back a somewhat from earlier session gains. However it powered ahead with its rally and the advance halted at the very 124 mark! 12400, 12420 and 12444 are ALL critical numbers that need to be taken out otherwise the Euro is in danger of forming a technical pattern known as a 'head & shoulders' in which if the mentioned levels are not dealt with then the Euro with get back to the lows as a bare minimum with a possible snap also likely. Promisingly the Euro is trying to turn short term positive but the next few sessions will need to be seen to distinguish where we're heading as it's too early to speculate for the moment. TMS system remains long from 12170.

Dow Jones & FTSE100

The Dow failed to advance from the resistance zone mentioned and so started a late day decline in which we ended lower and closed below the 10000 just as we stated. Futures after the close dived lower but importantly the TMS system signal given at 9858 failed to reverse and held firmly long - this is an indication that the bottom making phase is very much underway. In this volatile environment the lows must hold and resistance at 10200 must be taken out so that an upward trend can evolve. That is a fair range but tops and bottoms have a range attached to them - this is not the market deciding where it will end up as it simply knows where it is heading but it still must wrong foot many on its journey.

The FTSE100 must advance on 5100 today otherwise the mark of 5000 will be hit again.

The Dow showed strength for the whole session in which the U.S. majors and global stock markets surged. The positive development was the strength shown by the Nasdaq as that is the index that has to take lead earlier than the actual trend change. The Dow Jones is also trying to snap it's recent down trend but all is not yet conquered as for a start we must see if the week finishes out with a gain. 10274 and 10352 are resistance levels that need to be taken out with 10352 being even more crucial. Clearly the Dow must hold onto the gained 10200 mark with underlying support sitting at 10180 and 10140. The TMS system long at 9858 is sitting pretty with around a 400 point gain! The bottom is not confirmed though as please take this as a warning - the market can still plummet back to the lows, so caution is required.

The FTSE showed strength for the session in which it steamed past 5100 and sits nicely above 5200 at present. The market should continue higher with resistance sitting at 5269. Holding 5100 is required so that we can assess if a bottom is being formulated or not.

Crude Oil

We mentioned this week how crude can easily move away from the lows making them look far away. With crude being above $72 we are $5 away from the lows! That's a fair move but we would like confirmation that this move will stick before concluding a trend change. The majority of members respect the mentioning of critical levels which need to be given attention to as they are precise and concise. If you look at the quoted Crude commentary above you will see how the strong resistance was mentioned at $7168. The high yesterday was $7169.5 before Crude backed away by $1. So far today it has smashed through it and virtually moved $1 higher from the mark but the test will be to see if price can hold the very number. As it can easily retest it later and if it firms up then we can advance if not then prices will give back the rally.

Crude was King! In recent market volatility Crude led the way lower as all markets declined. It was only last Friday we said the following:

Crude was lower but recovered somewhat into the close. Any longs would now be rolled over to the next contract as the current price is above $70 on the July contract. A serious low is in the making in which an immense blow off would occur. $100 shout for 2010 is not over as the price of Crude sits at significant support. This financial instrument doesn't take long to take off from support and whilst looking ugly now it can simply be a matter of weeks in which the lows would seem far away.

So from $6720 to $7520 - That's an $8 quick move and yes for those of you that are not familiar with this market it would definitely appear like the lows are far away now! Well just to add if a re test of the lows is to occur then it would kick in pretty much over the next few sessions or a little further out in the short term. So the next few days' worth of price action will be important. For sure the market will be well supported at the lows. $7572 to $76 may cause initial problems for the market.

TMS Wishes you all a nice break over the Long Memorial Day Weekend.

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