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, WTI Crude Oil, Celsius, Defence, Empyrean, Filtronic, Neo, Ondo, Pensana, Renalytix, Sunda.
Markets are sitting at an interesting point right at the month-end. In several cases, price has spent long enough churning sideways that the next break could matter quite a bit. Some charts are shaping up for a push higher, others still look heavy, and a few are simply stuck in no man’s land.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100 looks ready to test the top of the range
The FTSE 100 is trying to work its way through the upper end of recent congestion, and the key level remains around 10,580 on an end of day closing basis. If that gives way, the next obvious target is the April resistance area near 10,700, ideally early in July.
If momentum really starts to build after this long period of logjam price action, there is scope for a move towards 10,900 by the end of next month. That is a punchy target, but not impossible if the market finally gets some clean upside follow through.
The technical backdrop is improving. The RSI has pushed back above the neutral 50 area, which often acts as an early sign that momentum is shifting in favour of the bulls. As long as the index holds above the 50 day moving average at 10,389, the upside remains the preferred scenario.
DAX still needs the breakout
The DAX has rebounded from the floor of the rising trend channel that has been in place since March. That keeps the broader structure intact, but the market still needs to clear the resistance line from last month before a stronger upside call can really be made.
If that breakout comes early next month, the target would be the top of the March channel near 26,350 by the end of next month.
The hesitation here is understandable. The DAX has managed to go nowhere at speed for a while, so that target may look optimistic. Even so, from a chart perspective, that remains the level in sight if resistance breaks properly.
Dow continues to consolidate near the highs
The Dow still looks like a market consolidating just below recent peaks rather than one rolling over. A small rising channel has been guiding price action, and the key near term trigger is around 51,600.
Above that, the first target is a retest of the recent spike towards 52,500. If buyers can keep pressing, there is potential for a move towards a projected November resistance line near 53,800 by the end of next month.
On the downside, the main concern would be a pullback towards the 50 day moving average just above 50,000. Even then, the preferred view is that price should remain above the floor of the June channel.
Bitcoin remains on the wrong side of key resistance
Crypto still looks awkward, and Bitcoin is not doing much to improve the mood. The market remains below 60,000 and has not even managed to recover to the resistance line from May, which comes in around 61,000.
As long as Bitcoin stays below that area, the bias remains lower, with the floor of the current wedge pointing towards 52,000 by the end of next month.
There is always the chance of an upside break, but even if that happened, the expectation at this stage would be limited to something around 65,000, which marks recent resistance. In other words, the chart still looks much more defensive than constructive.
Ethereum looks even weaker than Bitcoin
If Bitcoin looks poor, Ethereum looks worse. The market is trading well below the February low at 1,753, and remaining under that level keeps pressure on the downside.
The falling trend channel that has been in place since last August now points towards roughly 1,300. The longer price stays under 1,753, the harder it becomes to ignore that lower target.
For now, the burden of proof is very much on the bulls.
Gold is soggy, with 3,920 the level to beat
Gold has felt soft recently, and there is not much excitement in the chart yet. One modest positive is that the market has repeatedly found support around the line drawn from January, roughly in the 3,910 to 3,920 area.
If price can hold above that and push higher, the near term objective is around 4,100. But unless there is a convincing end of day close through 4,100, it is still possible to argue that gold could drift back towards 3,900 or lower over the short term.
This is not a market showing decisive strength yet. It still needs to prove itself.
WTI crude oil is stuck, but oversold conditions may help
Crude is still hovering around the $70 area, which matters more as a round number than as a particularly strong technical level. The clearer chart markers are:
- Support near $68, which is tied to the floor of the gap from late February
- Resistance at the 200 day moving average around $74.07
There is not a great deal more to say while price remains boxed in that range. The one point worth noting is that the RSI has dipped into oversold territory, which creates at least a mild bias towards a bounce back up to the 200 day line.
Stock charts to watch
Celsius Resources: Celsius has had a nasty fall since February, and the chart still needs work. There has been an attempt to break through the top of the falling wedge, but so far it has not really developed into anything convincing. The safer approach is to wait for an end of day close above the 50 day moving average. If that happens, the next target would be the 200 day moving average near 0.61p, assuming the current recovery has not already run out of steam.
Defence Holdings: Defence Holdings has pulled back sharply from the 1.8p area, which had been the technical target. At the moment the chart looks rangebound. The next bullish trigger would be another end of day close above the 50 day moving average at 1.22p. That would open up a possible move towards the 200 day line at 1.64p by the end of next month.
Empyrean: Empyrean is one of those charts that inspires caution because nearly every attempted rally has ended badly. Even so, the setup is worth tracking. The floor of the rising trend channel comes in around 0.04p. As long as the shares hold above that, the next key hurdle is an end of day close through the 200 day moving average at 0.057p. If that level breaks, there is room for a move towards 0.08p, even if the stock eventually slips back again as it has done repeatedly in the past.
Filtronic: Filtronic stands out because of the sharp rebound. The shares have bounced above a rising 200 day moving average, and that is usually a strong technical signal. While price remains above the gap support around 250, the target is the 50 day moving average at 342p by the end of next month. This is one of the cleaner recovery charts in the list.
Neo Energy Metals: Neo has been trading sideways, but the chart is not unattractive. Both the 50 day and 200 day moving averages are rising, which gives the overall structure a constructive feel. The shares have been trying to push through the 50 day line around 0.90p. If they can establish themselves above that level, the target becomes the top of the channel from December, which points as high as 1.2p by the end of next month, possibly sooner.
Ondo InsurTech: Ondo has been climbing in a stop start fashion, but the recovery still looks alive. The latest candle is encouraging, with price opening near the low and trading close to the high. The shares are also moving around the previous target area near 6p. A sustained move above 6p would bring 10p into view by the end of next month.
Pensana: Pensana has not been a chart demanding much attention for quite some time, and one glance explains why. Even so, there are signs of life. The shares have bounced from the floor of the falling trend channel. What matters now is an end of day close through recent resistance at 89p. If that happens, the top of the channel near 104p becomes the target, potentially by the end of next month. The RSI has also moved above neutral 50, which adds to the improving tone. On the day, this looks one of the better chart contenders.
Renalytix: Renalytix looks strong and arguably even better than it did the day before. The chart has several things going for it:
- A rising trend channel base
- A step like progression higher
- Consolidation above a rising 50 day moving average near the lows
That combination often produces one of the better setups in terms of potential move size. While the shares stay above recent broken resistance at 2.1p, the target is 3p by the end of next month, and possibly sooner.
Sunda Energy: Sunda has been difficult, with the most recent gap down adding to the damage. Even so, there is bullish divergence on the chart, which can sometimes hint that the selling pressure is beginning to fade. That may allow the shares to creep back up towards the top of the gap at around 1.8p, even if the rally proves temporary and the stock weakens again afterwards.
The bigger picture
The broad market picture is mixed but not directionless. Equity indices such as the FTSE 100, DAX and Dow still lean constructive as long as key support levels hold. Crypto remains the weak spot, especially Ethereum. Gold and crude are trapped in sluggish patterns, though oil may be due a short term bounce.
Among the smaller stocks, the charts with the most immediate technical interest are Pensana, Renalytix and Filtronic, while names like Empyrean and Sunda still need to be handled with care.
At month end, many of these setups are close to important inflection points. If the breakouts come, July could start with a decent burst of momentum.
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.
