Example

Daily UK Stock Report

March 30 2006

EMG

Opinion: Negative - Rising wedge pattern

Such has been the demand for this stock over the past few months, prices have risen consistently and effortlessly and without need for consolidation. Though there is no evidence yet of any long term selling pressure building, trading of late has formed a rising wedge pattern, which could manifest itself into a sizable correction should the lower boundary give way.

What would indicate a different scenario ?

Though a rising wedge pattern is typically associated with the impending reversal of an advance, equally, a break higher through the upper boundary is to be considered a bullish event. In the scenario above, a close above the upper boundary would occur at 2450 and is likely to extend the advance to 26.10.

Key bull triggers activated by closing break

EMG relative to FTSE 100

Resistances

Implications if overflowed

24.5

Clears the upper end of the rising wedge pattern and signals an extension of the October advance to round number resistance at 25.00

25

Clearance of round number resistance, reaffirms the bullish outlook for a further advance to 26.10

Key bear triggers activated by closing break

Supports

Implications if broken

23.16

Decisive break of support from the rising wedge brings an end to the advance of October and is a clear threat initially  to support at 21.80

21.8

Now points to a test of February-16 gap support at 21.50/21.38.

Supports and Resistance table - Nearest Levels*

Supports

23.16

21.8

21.50/

21.38

Resistances

24.5

25

26.1

* A close above any given resistance, or beneath support is needed to confirm a break.

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