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, ActiveOps, Avacta, Catenai, Ceres, First Tin, Hydrogen Utopia, ICFG, Jangada, Quantum Data, Nuformix, and Westmount Energy.
Bonfire Night commentary from the trading desk. Below are the technical reads and short term road maps for the major indices, commodities and a selection of small cap bulletin board names I have my eye on today. The focus is on support and resistance levels, moving averages and simple RSI signals that tell us whether bulls or bears have the edge over the coming days.
As always, do your own research and treat these as chart-based observations rather than hard recommendations.
Overview
Markets have been playing defence in lots of places. A few notable themes today were the classic old resistance becoming new support, some RSI 50 failures that warn of further weakness, and a handful of small caps that continue to build nicely on rising 50 day lines. Read on for the levels to watch and the next logical targets.
FTSE 100
The FTSE 100 gave us a neat technical moment where the old October resistance at 9,577 has behaved as new support. If you had an order parked at 9,577 you would already be up well into three figures on the index.
- Yesterday’s high: around 9,714. Today’s high so far: 9,723.
- Immediate bullish trigger: an end of day close above 9,714 to open a path toward 9,830 and the top of the rising trend channel from June.
- Downside risk: failure below the 9,577 support. Worst case channel floor and the 50 day line sit near 9,395.
DAX
The DAX is in a more worrying technical position. We have an obvious RSI 50 failure and the 50 day moving average is turning down, which is often a precursor to more downside.
- Support being tested: the floor of the April trend channel at roughly 23,700.
- If that fails the next logical target is the 200 day line near 23,300, likely over the next week or two.
- To neutralise that bearish set up the DAX needs an end of day close back above 24,000 and the 50 day line.
Dow
The Dow pulled back to old October resistance around the 47,000 level which so far has held as support. The RSI is still above neutral 50 which gives bulls a little breathing room.
- Support: 47,000. Worst case test of the 50 day line at 46,300.
- Bullish path: an end of day close above 47,000 targets the top of the rising trend channel from May last year at roughly 48,300 later this month.
Bitcoin
Bitcoin did what a few of us feared and tested the June support around 98,000. After failing through a rising 50 day line and a brief breakout, price has retraced lower.
- Key support: 98,000. As long as we remain above this level the market is buy on dips.
- To resume a fresh rally we need an end of day close above the October support near 103,000.
- Pulling back to 98,000 reduces some of the overheated hype and pressure in the market.
Ethereum
Ethereum tested the August support zone around 3,360 and the 200 day moving average at roughly 3,374. Price has even come down to the old June peak near 2,900, which acts as a lower risk support area.
- Risk remains while price is below the 200 day at 3,374.
- Worst case target while below that line is the 2,900 zone.
Gold
Gold continues to trade either side of the 4,000 level and faces resistance just above at around 4,040. The RSI has slipped below neutral which points to potential weakness into the 50 day line.
- Immediate resistance: 4,040.
- Support target on a pullback: the 50 day moving average near 3,846.
- If gold can break above 4,040 the next logical step is toward 4,180.
Stocks on my radar
Below are the small cap charts I reviewed. I include the key support and resistance levels, moving average context and the targets I am watching for before the end of the month.
Activeops
- Chart appears strong inside a rising trend channel.
- Important support around 227 to 228 pence on an end of day close basis.
- Target: top of channel near 270 pence by month end while above recent support.
Avacta
- Surprisingly strong with a rising trend channel and support well above the 50 day moving average.
- Top of channel target near 83 pence by month end while remaining on the right side of the mid 60s.
- RSI has shown higher rebounds which is constructive.
Catenai
- Bouncing on a rising 50 day line around 0.35 pence.
- First target hit previously at around 0.54 pence. I remain hopeful for that level to hold as a near term target into month end while price stays above the 50 day.
Ceres Power
- Strong RNS day. After the second target near 260 pence, late October resistance at 310 pence has been taken and opens a speculative swing target of 400 pence by the end of the month.
- Positive news flow and American interest have pushed the shares to the top of the rising trend channel from August last year.
First Tin
- Earlier targets were hit. The rule here was requiring an end of day close above 8 pence to open up a fresh run toward 15 pence plus.
- We ticked the intraday target but did not achieve the required end of day close, so the larger upside remains conditional.
Hydrogen Utopia
- Recovered strongly and gapped through the 200 day moving average following multiple RSI 50 rebounds.
- Support now sits above the rising 50 day moving average, which suggests a setup for a meaningful move.
- Trigger for the next leg is an end of day close or a break above 2.1 pence; above that the top of the falling trend channel near 2.7 pence becomes the objective.
ICFG
- A classic bullish divergence in the RSI: lower lows in price for late October but higher RSI readings.
- Potential move up to the 50 day moving average near 24 pence by month end if momentum follows the divergence.
Jangada
- Bounced above a rising 200 day and 50 day moving average.
- Top of the broadening triangle points to around 1.5 pence as the target while price stays above the 50 day line.
Quantum Data
- The name changed but the chart is doing the work. Shares are creeping toward the 200 day moving average at about 43 pence.
- Old resistance from last month around 34 pence is now the minimum target while price remains above broken resistance at roughly 23 pence.
- RSI has not yet moved above neutral 50, suggesting there is room for an extended move.
Nuformix
- Exceeded my earlier target at 0.5 pence and then pulled back sharply.
- I had conditioned the next leg higher on an end of day close above 0.5 pence to aim at 0.85 pence. That end of day close did not occur, so the larger target remains for another day.
Westmount Energy
- Gapped up and produced what I call a B shaped bull flag.
- Support near 2 pence is intact and the daily triangle that has been forming since the end of 2023 has a breakout target near 3.3 to 3.4 pence.
- If support holds we will watch for the triangle top to be tested.
What I am watching next
- End of day closes relative to key levels. These close confirmations are vital for deciding whether a setup is valid or not.
- RSI 50 behaviour. An RSI 50 failure often precedes further falls; rebounds above 50 support fresh upside.
- How major indices handle the 50 and 200 day lines. Breaks and retests of those moving averages will govern near term direction.
That is the round up for today. I will be watching the levels above and reporting any significant follow through. More updates tomorrow.
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.
