The UAE markets remain relatively sedated especially given the volatility and uncertainty in international markets. Low volumes persist as investors have been hesitant to enter in this environment. Dubai Last week the Dubai Financial Market General Index (DFMGI) declined 12.86 or 0.87 per cent to close at 1,467.74. Market breadth was bearish with 21 declining issues versus nine advancing. Volume was equivalent to the highs of the past five weeks. The DFMGI is at what could be a critical juncture. After dropping last Sunday the DFMGI spent the next four days testing support in the area of 1,459.22. A break above 1,473.97, the high of the past four days, increases the odds that the downtrend line might be broken. Until it is it remains resistance. The significance of this line is strengthened by the 50-day exponential moving average (ema) (not shown on chart), which has now converged with the trendline. Therefore, shortly after moving above the line the DFMGI could quickly get above the 50ema, which is now at 1,495.48. The 50ema is a medium term trend indicator. A close above it would be the first sign that the 21-week correction could be beginning to come to an end. Until then, however, the odds still favour a continuation of the correction with a break below 1,459.22 support giving the next bearish signal. At that point the selling force of the 21 week downtrend is back in play meaning that the odds of breaking through the low of the correction, 1,429.55, increases. This level should be combined with 1,428.09, support from February 2009, together creating a support zone from 1,429.55 to 1,428.09. The February level is important in that it marks the bottom reached during the sell-off from the credit crisis and has only been breached once, earlier this year. A close below it indicates we will likely test the low of the year at 1,338.56, and could eventually break through it. As pointed out in this column previously, the DFMGI has been trading within a high to low range over the past couple of years that has been narrowing, thereby forming a bearish descending triangle pattern on its chart. A false breakdown occurred in February of this year. But, the next decline through this level could see a more serious sell-off as a follow-through to the almost six-year downtrend. The target based on this pattern is very bearish and I\'ll leave it up to the reader to do their own calculations. Write me if you\'d like to compare. Alternatively, the chart pattern of the past two plus years could be looked at as a bullish wedge if the breakout is to the upside — above the downtrend line as discussed above. In this scenario the bottom trendline of the wedge, from February 2009 low to March 2011 low, would be tested on a drop through 1,338.56, indicating support could be found not too far below there. Abu Dhabi The Abu Dhabi Securities Exchange General Index (ADI) declined 22.95 or 0.88 per cent last week to close at 2,576.69. Volume was barely below the prior week. Market breadth was somewhat on the bearish side with 20 declining versus 12 advancing issues. Additional bullish follow-through off the August 22 low has not been forthcoming, with the ADI ending the week just below previous support at 2,577.76, as well as below the low from two week\'s ago. Further, the week ended on a bearish note closing very near the low of the week. As it stands now the ADI is at risk of further declines in the short-term. Downside momentum over the past two weeks has been tame so far, but volume picked-up on Thursday beating the levels of the past six days, which all closed lower. Thursday\'s volume was also the second highest of the past 22 trading days. Increasing relative volume on declining days or weeks is considered a bearish sign. Together with the break of the August 22 support level, the risk is rising for downside momentum to accelerate. Important support is at 2,551.71, only one per cent lower. A close below that level will signal a continuation of the three-month correction with the next support at 2,523.81. Alternatively, a period of consolidation could be developing in the ADI where the index stays within the range of the previous six weeks (2,621.07 to 2,551.71). In the short-term a break above Thursday\'s high of 2,587.72 signals strengthening and the possibility that the two week decline could be ending. Watch the area of the downtrend line for possible resistance with a close above it the first sign that the market could continue to strengthen from there. Above the line resistance is at 2,621.07. Stocks to watch The Dubai Financial Market is now sitting up against resistance of the downtrend line of the current correction. Resistance at Dh1.16 has been hit over five days in the recent past with a break above that level short-term bullish. Emaar Properties chart indicates a possible head and shoulders reversal pattern being formed. First sign of strength and upside breakout is above Dh2.83, with stronger confirmation above Dh2.90. Takafulem rallied strong off the bottom recently with signs that momentum may be slowing. It\'s completed a 61.8 per cent Fibonacci retracement of the previous downtrend with Thursday\'s price action indicating some degree of pullback may be coming soon. Bruce Powers, CMT, is a financial consultant, trader and educator based in Dubai, he can be reached at [email protected] Disclaimer: Stock market investments are risky and past performance does not guarantee future results. Gulf News does not accept any liability for the results of any action taken on the basis of the above information.