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, Atlantic Lithium, Amigo, Anemoi, Botswana, Conroy, Delta Gold, Defence Holdings, Goldstone, Hardide, Kavango, Vault, Quantum Helium, WeCap.
Markets are sitting on a knife edge as the year closes. A few indices are flirting with psychologically important round numbers while smaller names are staging a mixture of bear traps, gap recoveries and RSI driven rebounds. Below are the practical levels and the technical rationale worth noting if you trade momentum or manage a watchlist.
As always, do your own research and treat these as chart-based observations rather than hard recommendations.
FTSE 100
The FTSE is still close enough to feel optimistic. A daily close above 9,770 keeps the path open for a push to 10,000 by the end of the month, with a conservative extension to 10,100 next month inside the February trend channel. On the downside, the 50 day moving average near 9,663 is the safety net to respect.
DAX
The DAX is trading better than the FTSE, holding above the October resistance line near 24,100 and the 50 day line. Immediate upside targets are the October record area around 24,700 and, best case by the end of January, the top of the rising April channel near 25,700. The recent RSI bounce through the 50 level is a positive short term lead indicator.
Dow
Momentum remains constructive on the Dow. Sitting above 48,000, the index has shown multiple RSI 50 rebounds and a clear route to 49,200 by month end. If momentum accelerates, a run toward 50,000 next month is not out of the question. The 50 day moving average around 47,222 is the main downside buffer.
Cryptocurrencies
Bitcoin
Bitcoin remains boxed under its October resistance, around 89,000. Until there is an end of day close above that line and an RSI back above 50, the market can still fail in the high 80s and retest the rising trend channel floor near 81,000. If it does break higher, initial upside lies at 94,000, then around 99,000.
Ethereum
Ethereum has been fighting around the 3,000 mark. It bounced off the April uptrend near 2,830, which is supportive, but the RSI remains below neutral at around 47. A convincing move will require an end of day close above the 50 day line at 3,107 and the RSI above 50. That would open a potential run toward the 200 day area at 3,575. On the downside, a brief retest near 2,622 cannot be ruled out.
Gold
Gold is nudging higher and remains in an upward projection from the November resistance line. A near term target is around 4,725 while recent support and initial December resistance sits near 4,270. Staying above that support keeps the bullish path intact.
Stocks to watch
These smaller names are where volatility and quick gains or reversals tend to appear. The notes below pair the technical setup with short term targets, assuming the described supports hold.
- Atlantic Lithium: After a nasty bull trap through 10.7p and a subsequent gap down, a gap higher created a bear trap island reversal. As long as the share price holds above the 50 day at 9.11p, a reasonable target is the top of the September triangle near 12.6p by the end of next month. RSI is around 58, which helps the recovery case.
- Amigo:The chart has shown repeated RSI 50 rebounds since October and we saw a gap closed buy signal followed by a breakout through 0.55p on an end of day close. A stretch target into the triangle top near 0.84p by the end of next month looks plausible, though newsflow can quickly change the story.
- Anemoi: Price action here resembles a controlled rises above a rising 50 day. The top of the channel and October resistance lie around 2.5p. Staying above the 50 day and the 200 day provides the backdrop for a retest of that area through January.
- Botswana Diamonds: The shares have re-established themselves above the 50 day moving average after several sessions and show bullish divergence in RSI. Look for a push back toward the top of the range and the channel, with an upside target in the region of 0.70p by the end of next month while the 50 day holds.
- Conroy: Is tracing a rising trend channel. If the pattern persists, a run to the upper channel near 16p is feasible by the end of next month, with the floor of the channel near 9.3p and the 50 day around 10.4p acting as key supports.
- Delta Gold: A fresh uptrend looks to be forming. After a pullback into the channel base the share price is trading back near 18p. The rising 50 and 200 day averages are positive. A target around 26p by the end of next month fits the updated rising channel.
- Defence Holdings: This name has been under pressure inside a falling trend channel since October. The top of the channel sits around 1.6p. The immediate technical objective is an end of day close back above 1.3p. The 200 day near 1.01p acted as support; the best case into next month is nearer 1.9p toward the 50 day if bullish momentum returns.
- Goldstone: Bounced from the floor of a rising channel and has a rising 50 day. Sustained trading above the 50 day at around 0.43p targets the top of the range near 0.74p by the end of next month. Recent contract news and a 1.8 million order from a US energy customer underpinned this move and the shares have already cleared a second target above 15p.
- Kavango: Produced a bear trap rebound from below 0.60p. The 50 day around 0.70p is a reasonable next level to seek into January, even if the shares pull back afterwards.
- Quantum Helium: Following a gap higher on Friday, this is on track for a second up day. The focus is on holding above the top of the gap near 0.035p. A retest of the 0.07p area looks achievable if the stock remains above 0.04p on a consistent basis.
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Vault Ventures: Has overachieved on the recovery so far. A near term objective is an end of day close above 1.22p to reach the upper parallel of the falling channel. The 200 day and that upper line suggest upside near 1.7p by the end of next month, provided the stock does not close back below recent broken resistance of 1.13p.
- WeCap: Has bounced off the 200 day moving average close to 1.69p. The initial technical target is the 50 day near 2.4p and then the top of the channel and last month resistance above 4p. Note the mention of a possible one year lock in is worth confirming if you trade or buy, as holding restrictions change liquidity and risk.
Also on the radar
Other names from the wider watchlist include Hardide, Vault and a few more bulletin board plays. These often move on contract updates or RNSs and are worth keeping on a supplemental watchlist rather than piling into without clear support levels.
What to watch this week
- FTSE end of day closes above 9,770 for the bullish monthly target to remain viable.
- Bitcoin close above the October resistance near 89,000 and RSI crossing above 50.
- Ethereum finishing above the 50 day at 3,107 to enable a push to the 200 day.
- Small caps to hold their 50 day or 200 day supports as listed. A daily close back above key broken resistances often confirms the start of the next leg higher.
Trading is about managing probabilities not certainties. Respect the trend lines, watch the moving averages and use the RSI for early signs of strength. When gaps, bear traps or bullish divergences line up with rising 50 and 200 day averages you have the ingredients for a meaningful move. Keep stops sensible and size positions for the volatility that comes with these names.
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.
