Both the Dubai Financial Market General Index (DFMGI) and Abu Dhabi Securities Exchange General Index (ADI) continue to show signs of trending higher in the medium term. Whether interest in the UAE markets will grow in the short term, as we move into the traditionally slower summer months, remains to be seen. We\'ll want to see volume increasing in the coming weeks to support a bullish scenario. Dubai The Dubai Financial Market General Index (DFMGI) declined by only 9.63 or 0.61 per cent last week to close at 1,556.71. The market has been going essentially sideways the past six days while volume has been close to the average of the past five weeks. Advancing issues were half declining of 20, confirming a slight bearish bias. However, the more important aspect of last week\'s market action is that it is taking a short rest after breaking its five week downtrend pattern. This is healthy for the market prior to making another run to the upside. Alternatively, a further pullback is possible before the next run. A short-term bullish outlook will persist as long as the DFMGI stays above its short downtrend line, as seen on the accompanying chart, and above support of 1,519.49. Further upside in the short term is signalled once the DFMGI closes above 1,584.16. If the trending pattern developing in the DFMGI continues to form as nicely as it has been then there\'s a good chance the DFMGI will at least get back up to the 1,691 area in the foreseeable future. Abu Dhabi Last week, the Abu Dhabi Securities Exchange General Index (ADI) continued to trend higher rising 30.79 or 1.15 per cent to close at 2,703.34. Volume declined some from the previous week while breadth was on the bearish side with 26 declining issues versus 16 advancing. Lower volume and bearish breadth are signs of declining momentum, at least in relationship to the prior week. Even though the ADI continues to appreciate, the rate ascent is slowing. This shouldn\'t be a surprise as the ADI has now closed higher on nine of the past 10 trading days, a sign that we are now closer to a pullback or consolidation in the short term. A further indication of momentum slowing can be see in the declining volume in each of the past three days. What is notable is that the ADI broke out of a large symmetrical triangle chart formation last week as it traded above the downtrend line. This is bullish behaviour and indicative of buying strength returning to the market. We should start to see additional signs of strengthening over the next several weeks. Some of the things to watch for include: increasing volume, shallow pullback or short tight consolidation phase before continuing higher, the ADI staying above the downtrend line, or a close above the next resistance area before the index pulls back or consolidates. The downtrend line had identified resistance of this price pattern, now it should be watched as support. Further confirmation of strength will be indicated upon a close above the next potential resistance area of 2,718.52. One of the useful aspects of a symmetrical triangle consolidation pattern is that it can be used to identify a minimum potential target of where price might go. In this case a medium term target of 2,898.42 can now be identified. This doesn\'t mean that the ADI will reach that level in the medium term, just that now there is a much better chance that it will than has been true previously. Stocks to watch Deyaar Development, highlighted last week as being possibly close to breaking out of consolidation, did not break out. Consolidation is continuing and evolving into a larger pattern. This pattern is now less clear than it had been, but can still be watched as the underlying price structure remains bullish. Also, Union Properties was discussed last week as being close to breaking out of consolidation. It did start to breakout to the upside but so far has not followed through. Follow through is necessary to confirm that buying strength is returning. Since it has not yet, this consolidation pattern may also continue to form and evolve into a larger pattern before trending again. Union National Bank rose 2.09 per cent last week as it moved above previous resistance from September 2009 (Dh3.884) and the 200 period exponential moving average (ema) on its weekly chart (Dh3.88). The 200ema is a long term trend indicator and in this case also identifies resistance. With a close above Dh3.90 for the week Union National is indicating it will likely go higher. If it can close above Dh3.95 then this might happen in the short term. The close of last week was the highest for this stock since October 2008. Alternatively, the resistance area of Dh3.88 could hold and lead to a pullback first. By trading above Dh3.884, this stock is starting to signal a breakout of a 21 month basing period (sideway consolidation from a previous uptrend) — a very bullish sign for the medium term trend. Bruce Powers, CMT, is a financial consultant, trader and educator based in Dubai, he can be reached at [email protected] 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.