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, Alkemy, boohoo, energy B, Guardian Metal, Halo Minerals, MedPal, On The Beach, Vistry.
Markets have managed a bounce, but this is still the sort of environment where sentiment can change quickly. A lot of the charts are sitting at important technical levels, and in several cases, the move lower now looks more like a bear trap than the start of a full-blown breakdown. That said, with geopolitics hanging over everything, nobody should get too comfortable.
Here is the state of play across the major indices, crypto, commodities, and a handful of UK stocks that are setting up interesting chart patterns.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100: Holding the 50 day line is the key
The FTSE 100 has rebounded from the support area marked out by Wednesday’s low, after briefly dipping under May support. That move below support now looks like a classic shakeout rather than a decisive break.
The encouraging part of the setup is the rising 50 day moving average, which has helped keep the broader structure constructive. That has reduced the risk, at least for now, of a deeper slide towards the lower channel area and the 200 day moving average near 9,980.
The big level to watch is the 50 day moving average around 10,399. If the index can stay above that into the close, the bullish case remains alive. Above there, the next hurdle is the February resistance line near 10,450.
If that gives way, the upside opens toward roughly 10,800 by the end of next month.
The RSI has also improved, pushing back above the neutral 50 mark to around 55, which supports the idea of renewed momentum. For now, the message is simple:
- Stay above 10,399: constructive
- Break 10,450: stronger upside signal
- Potential target: 10,800 by the end of next month
DAX: Bounce from the 200 day line keeps the recovery in play
The DAX has also respected a major support area, bouncing from the 200 day moving average near 24,182. Given the recent pressure, that was about as deep a pullback as bulls could reasonably tolerate without the chart starting to look much more vulnerable.
The index is now trying to reclaim the 50 day moving average around 24,300. If that level is recovered properly, attention shifts back to the May to June resistance area near 25,400.
As long as the DAX remains above 24,100, the path of least resistance looks higher into the end of the month.
- Support: 24,100 to 24,182
- Near term hurdle: 24,300
- Upside target: 25,400 over the next week or two
Dow: Minor bear trap, bigger recovery still intact
The Dow has followed a similar pattern. The lower boundary of the recent price channel appears to have held, and the dip below the 50,000 area now looks like another minor bear trap.
Importantly, price has stayed above the rising 50 day moving average at 49,465, which keeps the short term trend pointing upward. The first upside target remains 52,000, with scope for a move toward the November resistance line around 53,100 by the end of this month.
Despite the recent wobble, this is broadly in line with the bullish setup that was already in place at the start of the month.
Bitcoin: Consolidation or a pause before another leg lower?
Bitcoin remains difficult to call with confidence. The current range between 59,000 and 65,000 could simply be consolidation, but it could also be a pause before another move lower inside the falling trend channel.
If the bearish interpretation wins out, the downside risk stretches as far as the 42,000 area, which would be a nasty outcome.
On the other hand, if Bitcoin can close back above 65,000, the chart would improve and the next obvious target becomes the old support area from early April near 70,000.
For now, this one still looks trapped between two very different scenarios:
- Below 65,000: risk of a continuation lower remains
- Above 65,000 on a closing basis: recovery toward 70,000
- Worst case downside: 42,000
Ethereum: 1,753 remains the dividing line
Ethereum is in a similarly awkward position. The February low at 1,753 is the main technical reference point, and price is still below it. That leaves the market vulnerable unless it can reclaim that level decisively.
The bearish scenario ranges from a softer retest of support around 1,500 to a much uglier slide toward 1,000. If the market can close back above 1,753, then a recovery toward 2,000 comes back into play.
At the moment, the cleanest approach is either to remain cautious while price stays below 1,753 or wait for a proper close back above that level before looking for upside.
Gold: A nasty break, but a rebound is trying to form
Gold has probably been one of the more painful charts recently. It dropped below the March low around 4,098, but has since staged a bear trap rebound.
If that rebound can hold, the best case near term target is a recovery toward the late May support zone around 4,355 over the next week or two.
That does not completely repair the damage, but it would at least suggest that the move below March support was a false break rather than the start of a fresh collapse.
WTI crude oil: Still looks weak unless 85 to 88 is reclaimed
Crude oil had a bad session after a key reversal lower, and the chart still looks heavy. The lower boundary of the falling trend channel, previously around 83, has shifted down toward 81, which lines up with April support.
If oil breaks below 80, the chart opens up in an uncomfortable way, with the 200 day moving average down at 73.42 becoming a realistic target. That would be a major retracement and quite a shock given how bullish the market had looked only a few months ago.
On the bullish side, the market needs to recover 85 at a minimum, and ideally regain the old May support around 88, to suggest a more durable turnaround. Until then, the falling 50 day moving average keeps the pressure on.
- Immediate support: 81
- Break below 80: risk of a move to 73.42
- Turnaround signal: close back above 85, and preferably 88
Small-Cap’s
Alkemy Capital: Bear trap recovery back above 229p: Alkemy has suffered a sizeable pullback, but the chart is starting to look more interesting again. Price has recovered back above late May support around 229p, giving the move the feel of a bear trap. That recovery through the recent gaps is encouraging. If the stock can build on this and close above the June resistance at 260p, that should act as the proper trigger for a move toward 302p, where the top of the falling trend channel and the 200 day moving average come together.
boohoo: The 32p target no longer looks far fetched: boohoo, or Debenhams if you prefer the newer branding, continues to respond well after the trend line break earlier this month. The old upside target of 32p once looked optimistic, but after today’s gap higher and the break above 24p resistance, it suddenly looks a lot more realistic. The base case remains a move toward 32p by the end of next month, although if momentum continues at the current pace it may get there sooner.
energy B: Wild, speculative, but worth noting: Energy B has become more of a spectacle than a conventional technical setup. A move of more than 127% tells you immediately this is not a normal chart in normal conditions. Even so, the 10p area matters. If the stock can hold above that on a closing basis, then there is scope for the move to extend. The next chart based level to keep in mind is 20p plus. This is clearly a highly charged and rather artificial situation, but when price action gets this dramatic it is still worth keeping on the radar.
Guardian Metal: Range bound, but today’s gap may change that: Guardian Metal has spent a fair bit of time trapped in a broad range between roughly 190p and 260p. It has bounced from the floor of the rising trend channel in place since January, and today’s gap higher offers some hope that the stock can rotate back toward the top end of that range. The first objective is a return to the 50 day moving average at 248, with 260 as the more obvious resistance level to test by the end of this month. The chart is still range based, but it is beginning to lean in a more constructive direction.
Halo Minerals: Gradual recovery with 10 to 11p in sight: Halo Minerals has been edging higher steadily rather than explosively, which some traders may actually prefer. The minimum upside target is the top of the falling trend channel around 10 to 10.12p over the coming days or by the end of next week. The best case near term target is the 50 day moving average around 11p. If the stock can remain above the initial June resistance at 8.75p, there is also a more ambitious possibility of reaching the 200 day moving average near 16p by the end of next month. For those looking for a setup with less drama than some of the microcap spikes elsewhere, this one may appear more orderly.
MedPal: Resistance hit almost exactly, but the bigger structure still looks positive: MedPal has been moving very close to its projected path. The target of 4.5p for this month has nearly been reached, with the intraday high coming in at 4.35p. That is notable because it lines up almost exactly with the top of the channel that had been mapped out. After hitting that resistance almost to the point, the important thing now is for the shares to stay above 3.65p, which marks the April peak. If that former resistance becomes support, then the stock can continue working higher. The best case target by the end of this month is 5.59p, which also coincides with the 200 day moving average.
On the Beach: Breakout setup building above 165p: On the Beach has quietly put together a very respectable chart. It rebounded after dipping below March support at 151p, then pushed above the 50 day moving average at 158p and broke a major resistance line that had been in place since August last year. The key trigger from here is an end of day close above 165p. If that happens, the stock could move fairly quickly toward 195p by the end of this month. That target comes from the top of a broadening triangle formation dating back to February and sits not far below the 200 day moving average around 200p.
Vistry: RSI may be leading the next move: Vistry is not normally the sort of stock that jumps out from a trading perspective, but the RSI setup is interesting. There is an uptrend line in the RSI window that has held several times, and that often acts as an early signal that price is preparing to turn higher. In these situations, momentum can lead price. If the RSI closes above 40, that would improve the odds of a share price breakout following soon after. The initial target is this month’s resistance at 280p by the end of this month, with a best case move toward 303p. In simple terms, if the RSI confirms, the shares could be on their way back toward the £3 area.
The bigger picture
Across a lot of these charts, the same themes keep appearing:
- Bear traps below support are being reversed
- 50 day moving averages are acting as important short term trend markers
- Several markets are at make or break closing levels
- Momentum indicators such as RSI are starting to improve in selected names
That creates opportunity, but it also means discipline matters. In this sort of tape, a close above or below a key level can make all the difference between a recovery move and another leg down.
For now, the tone has improved, but it still needs confirming across the board.
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.
