monday night chart - 20 july

Good evening all,

Here is my feeble effort at interpreting the price movement of BRM over the last week and indicating the likely movement over the coming week.

I have embedded the following text in the image itself simply for your convenience in reading the explanation and the chart simultaneously and easily.

With regard to the chart, the symmetrical triangle formed by the ascending green line AA – BB and the descending red line CC - DD usually forms during a trend as a continuation pattern. Such a contracting wedge more often than not marks a continuation of the current trend, in this case the rising share price since around 1 Jun 09 in the short term, and in the longer term, the average/median increase in the share price since Jan 09.

With a symmetrical triangle, the direction of the next major move can only be determined after a valid breakout has occurred. This symmetrical wedge appears to me to represent a consolidation period before continuing the trends mentioned above.

For a break to be considered valid, it should be on a closing basis. Today's close above the descending red CC – DD line represents a breakout in the direction of the short and long term trends I described, and it also occurs with an expansion in volume (the largest over the last eight trading periods) which an upside breakout should exhibit.

Tomorrow's trading should provide us with an indication of the strength of the breakout – whether it rises strongly, or falters initially to gather more momentum first.

Regards,
Bones