Zak Mir takes a charting look at some of the most closely followed small caps on the London Stock Exchange. Today’s charts are the FTSE 100, DAX, Dow, Bitcoin, Ethereum, Gold, WTI Crude Oil, AOTI, Essentra, Everplay, Georgina, GCM, Itaconix, Neoterra, Oxford Biodynamics, Water Intelligence, YouGov.
The broad market picture remains constructive in the main equity indices, while Bitcoin and gold are struggling to deliver the same sort of confirmation. The key theme across the charts is straightforward: hold above the relevant 50-day moving average and broken resistance, and the upside targets remain in play. Lose those levels, and the picture changes quickly.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100: A Proper Break Through 10,750
The FTSE 100 has finally broken the 10,750 area after a couple of previous attempts. That was the level to clear, and the setup going into the move was very strong.
There were multiple daily lows above a rising 50-day moving average, currently around 10,491. The RSI also produced at least three rebounds from the 50 area, which is normally a useful leading indicator for further upside. Most importantly, the index stayed within the rising trend channel that has been in place since March.
As long as the FTSE can remain above 10,750, the quicker and stronger the move towards the top of the channel should be. That points towards 11,000, initially expected by the end of next month, although the current momentum means it could arrive sooner. That may be slightly punchy, but the technical setup is hard to argue with.
DAX: Trading the Gap, With 26,300 in Sight
The DAX has reached the area around the top of the earlier-month gap, in the 25,000 to just under 25,500 zone. For now, this looks like the principal trading range.
The key floor is around 25,300, the lower edge of the gap. While the index holds above that level, the next chart destination is the top of the rising channel from March, towards 26,300. That is a possible end-of-next-month target, or potentially sooner if the market keeps its momentum.
The maximum downside area is currently the rising 50-day moving average, just below 25,000.
Dow Jones: 52,500 Is the Level to Beat
The Dow needed to reclaim 52,000 after spending a couple of sessions below it, and it did manage to close the gap. The recovery has not been hugely convincing, though, and the important next hurdle is the resistance line at 52,500.
An end-of-day close through 52,500 would be the proper trigger. Above that, the rising trend channel from April suggests a move towards 54,000. There is also a November resistance-line projection pointing towards 54,700.
The 54,000-plus zone is the end-of-August target while the index remains above the April support line and the 50-day moving average around 51,500. The RSI has bounced from its own uptrend line and moved back above neutral 50, which is another modestly positive sign.
Cryptocurrency: Bitcoin Needs to Hold 63,300, Ethereum Holds Up Better
Bitcoin
Bitcoin is the disappointing one in the crypto space. It had previously bounced above a rising 50-day moving average, and that average is still rising, but the market is now right on the edge.
The level to watch is 63,300 on an end-of-day closing basis. While Bitcoin holds above that level, there is still a chance of reaching the October resistance line around 68,000, with the 200-day moving average near 71,800 as the higher target.
However, one more decisive down day below the 50-day line would be a poor development. That would raise the risk of a move down to the early-July support area at 61,000.
Ethereum
Ethereum is doing what Bitcoin has not managed to do: it is still rising above a rising 50-day moving average. The RSI remains above the neutral 50 level as well, so the chart has a better tone.
As long as Ethereum stays above the 50-day line at 1,757, the best-case target is the 200-day moving average around 2,127 by the end of next month.
Gold and WTI Crude Oil: Both Charts Need Repairing
Gold
Gold remains a mixed, and increasingly unimpressive, picture. The market has failed below the 50-day moving average yet again. It has been a repeated problem over the past month or so, and the falling 50-day line is the central issue.
While gold remains below the recent support level at 4,020, there is scope for a move towards the 3,900 to 3,920 zone. That is the area defined by post-October support, even if the market then manages to bounce.
The RSI is only just holding its June uptrend line, but it has not offered much practical support. The repeated failures beneath a falling 50-day average are simply not a good look.
WTI Crude Oil
WTI crude started the week with a gap down and has maintained it. The market is below the 50-day moving average at 81.91, which leaves the risk of a move to the 200-day average around 75.70.
That is the bearish scenario, even if crude then finds a bounce. The latest failure occurred ahead of the temporary easing in the Iran conflict, which made the move look rather suspicious.
For the more constructive alternative, crude needs an end-of-day close back above the 50-day line while the RSI remains above 50. That could then support a gap fill towards $87.
Key Levels to Keep on the Radar
- FTSE 100: Hold above 10,750 for a move towards 11,000.
- DAX: Keep above 25,300 for 26,300 to remain the upside target.
- Dow Jones: A close above 52,500 would target 54,000 and potentially 54,700.
- Bitcoin: 63,300 is the make-or-break closing level, with 61,000 below as key support.
- Ethereum: Stay above 1,757 for the 2,127 target to remain live.
- Gold: Below 4,020 leaves 3,900 to 3,920 vulnerable.
- WTI crude: Below 81.91 keeps 75.70 in play, while a recovery above it could target $87.
- YouGov: Hold 232p channel support for a possible move to 284p.
The indices remain the strongest part of the wider market picture, with the FTSE 100 breakout particularly encouraging. In contrast, gold and crude need to reclaim their 50-day averages, while Bitcoin is sitting at a very important decision point. Among the individual shares, momentum remains concentrated in AOTI, Itaconix and the improving recovery charts, with Water Intelligence and YouGov also looking technically constructive.
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.
