Zak Mir takes a charting look at some of the most closely followed small caps on the London Stock Exchange. Today’s charts are FTSE 100, DAX, Dow, Bitcoin, Ethereum, Gold, Cloudbreak, Cora, Ceres, EnergyPathways, GEO, Haydale, Kodal, Mila, Nuformix, Panthera, and Strategic Minerals.
As always, do your own research and treat these as chart-based observations rather than hard recommendations.
Market roundup
FTSE 100
The Footsie is enjoying a secure star rally and is still trading near record highs. I can see the top of the June trend channel pointing towards 9,820 to 9,830 by the end of this month, provided we remain above initial support around 9,650.
Worst case is a rug pull back to the initial October resistance at 9,577. For now though, the market looks set fair despite the potential political noise and the odd overenthusiastic pat on the back from people citing record highs as an achievement.
DAX
The DAX has dug itself out of trouble, bouncing from just below the 50 day moving average with the RSI back above neutral 50. That suggests the boring range around 24,000 is likely to continue for a while.
Resistance sits near the record high at 24,800. Best case is a slow drift higher to around 26,000 by the end of the year. The downside scenario would require a test of the 200 day line around 23,300. If you are an aggressive trader, an end of day close above about 24,200 could be a signal to chase higher.
Dow
The Dow looks like a bull flag near the highs, hugging the top of the channel that began in May last year. A near term target is around 48,300, provided we stay above the old October resistance near 47,000.
Worst case, a tariff scare or similar headline could pull the index back to the reliable 50 day line around 46,200.
Cryptocurrencies
Bitcoin
Disappointing price action. Bitcoin is sitting at the floor of its rising trend channel and has shown a clear RSI failure below neutral 50, which I treat as a proper sell signal.
Look for October support around the 103,000 level. With a falling 50 day line, two recent failures and a rejection at the 200 day line, a move down to around 98,000 is possible unless we see a decisive end of day close back above the 200 day line near 109,000.
Ethereum
Ethereum is clinging to the floor of the uptrend that began in April. A possible buying zone is around 3,700, but the RSI has shown a failure below neutral 50, so caution is required.
Key support sits in the region of the August low at around 3,330, with the 200 day line close by at about 3,358. Those are the levels to watch for a dip-buy opportunity.
Gold
Gold has found support at the top of its old rising trend channel, which was a previous target area near 3,970. If we rally from here, resistance comes into view around 4,160. If the market rolls over, the obvious support to watch is the 50 day line close to 3,820.
Small caps and stocks to watch
Here are the charts and levels I am tracking on a handful of bulletin board stocks. I explain the structure, current signals and where I would look to buy or sell.
Cloudbreak
Cloudbreak has transformed since August and sits in a rising trend channel. We had an RSI bounce through neutral 50 at the end of last week. The top of the channel is pointing towards around 1.75 pence, which could be realistic by the end of next month or by year end if momentum holds. Keep a protective level around recent support near 0.9 pence.
Cora Gold
Cora is trading near the floor of its channel. If you believe the political noise will not end in licence cancellations, then the area around 5.25 pence could act as support. On the other hand, wait for an end of day close back above the 200 day line at roughly 6.75 pence to target a move to 10 pence plus.
Ceres Power
Ceres has already hit the second target, touching the red line around 260p. Above that level, the next bullish projection I am watching is targeting around £4, though that would be a more ambitious move.
EnergyPathways
After a spike through 10 pence, the shares retreated back to the 200 day line which is now acting as potential support. There was an RSI 50 rebound recently, which is encouraging. Next downside would be near 4.3 pence. If buyers step in here, a move back to around 7 pence is possible.
GEO Exploration
GEO is bouncing at old resistance near about 0.25 pence. If it can hold above that and clear the near term zone, a retest of the September resistance at around 0.55 pence could be realistic by year end. Cautious traders should wait for an end of day close back above the 50 day line at approximately 0.34 pence. Weakness would expose the 0.25 pence area.
Haydale Graphene
Haydale spiked on news and has since retreated, but remains above a rising 50 day line and has provided an RSI rebound above 50. That is constructive for bulls. While the shares stay above about 0.60 pence, there is room to dream of a bigger rerate later in the year.
Kodal Minerals
Kodal has been slightly affected by the recent sector jitters, but there are buyers on the dip. The floor of the channel sits near 0.20 pence, which could offer a dip-buy opportunity. Alternatively wait for an end of day close above the 200 day line at around 0.35 pence to target the higher end of the range near 0.10 pence plus.
Mila
Mila keeps going up. The chart looks set to challenge the third target through about 2.75 pence and, beyond that, there is not much between that level and about 4.3 pence. Holding above recent support around 2 pence keeps the upside scenario intact.
Nuformix
Nuformix has been one I called correctly. It pushed RSI above neutral 50 at the end of August and has remained constructive through the recent volatility. My target here is around 0.5 pence, and I am staying bullish while we hold above the recent broken resistance near 0.36 pence.
Panthera
Panthera has continued to play out. A red resistance projection from December is heading for roughly 33 pence. After beating the previous target at 22 pence, I would like to see the move into the low 30 pence area by the end of next month.
Again, RSI action around neutral 50 is supportive of the uptrend.
Strategic Minerals
Strategic Minerals has revived itself dramatically and is working through several upside targets. We are currently looking at a fifth target up to about 1.88 pence, which could be hit in coming days if momentum continues.
There is very little on the chart between the 2 pence area and about 3.75 pence, so a successful breakout would leave a clear runway for further gains.
Summary and trade thoughts
- Major indices look constructive overall. FTSE is near record highs, DAX has stabilised, and the Dow is in a bullish flag pattern.
- Cryptos are fragile. Bitcoin needs an end of day close above the 200 day line to take the heat off. Ethereum has clear supports near the 200 day and April uptrend.
- Gold has found support at its old rising channel but still needs to prove it can rally through resistance near 4,160.
- On small caps, watch the support and resistance lines I have flagged. Dip buys can be attractive when key moving average support holds, but wait for clean end of day closes when you want confirmation.
Disclaimer & Declaration of Interest:
The information, investment views, and recommendations in this Zaks Traders Cafe interview are provided for general information purposes only. Nothing in this interview should be construed as a promotion or solicitation to buy or sell any financial product relating to any companies under discussion or referred to or to engage in or refrain from doing so or engage in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the commentator but no responsibility is accepted for actions based on such opinions or comments. The commentators may or may not hold investments in the companies under discussion.
