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, Aoti, CPP, Eurasia, Greencore, Hvivo, Orcadian, Predator, Sintana, Tooru, Valereum.
The market is in summer mode, but there are still plenty of charts with clear levels to respect. The broad message is straightforward: several major markets are holding important support, while a number of smaller shares are attempting recovery patterns that need confirmation before getting too excited.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100: support at 10,610, then 10,750 is the trigger
The FTSE 100 has bounced from the top of its previously falling trend channel, around 10,610. The low at 10,599 was therefore a useful potential buying area, based on the old technical rule that former resistance can become new support.
The key upside level is now 10,750 on a daily closing basis. A clearance there would put February’s 10,900 peak back into focus and could open the way towards 11,000 by the end of next month. That is a punchy target, but the RSI structure has been punchy as well.
RSI has bounced around the neutral 50 area and, on the latest move, has held well above it. Price has also spent the best part of two weeks bouncing above a rising 50-day moving average. That is the sort of technical setup that keeps the bulls in control.
DAX: 24,700 remains the line in the sand
The DAX is sitting on the floor of its rising channel from March. It tested that area almost exactly, with a low around 24,700.
As long as the index stays above 24,700, the preferred outcome is a move towards 25,400 to 25,500, filling the gap left earlier in the month. A breakdown would point to the 200-day moving average near 24,300, but nothing worse than that is expected at this stage.
Dow: it needs to reclaim 52,000
The Dow remains a chart trying to stay inside its rising channel. It gapped down and moved towards anticipated support around the 50-day line, near 51,400, without quite reaching it. Given the bounce, failing to test that support could turn out to be a positive development.
For the chart to get properly back on track, it needs to fill the gap towards 52,200. The more cautious approach would be to wait for the earlier-month resistance level at 52,700 to give way before assuming the upside has properly resumed.
At the moment, RSI is around 45, which is not a great look. The Dow really needs to regain 52,000 and get RSI back above 50.
Crypto: Bitcoin support and Ethereum’s upside door
Bitcoin
Bitcoin remains stuck below the mid-June resistance area around $67,000. While it stays below that level, there is scope for a test of the rising 50-day moving average near $63,100.
That lower level would be a reasonable opportunity within the recent tight range, rather than a signal to expect a collapse. There is also an RSI uptrend line around 45, although it has not been tested yet.
Ethereum
Ethereum has not managed to build on its recent upside attempt. It got stuck at resistance around $1,950, having looked capable of heading towards $2,000.
RSI at 57 is still in a constructive position, leaving the door open for a move towards the 200-day line around $2,160. A final test of the 50-day moving average near $1,736 cannot be ruled out, but the preferred range remains $1,900 to $2,000 rather than a move lower.
Gold: respect 4,030 support
Gold has been reacting to geopolitical headlines in a way that does not always make much sense. The chart matters more. Recent resistance sits around 4,200, which also coincides with the top of the current channel. The 50-day moving average near 4,230 is the maximum immediate target.
That constructive view holds while gold remains on the right side of the broken resistance line near 4,030. Sustained action below 4,000 is not expected. Even though price has slipped back below the 50-day line and RSI 50, the worst may already be over.
WTI crude oil: $87 is the immediate test
Crude looked as though it might head directly for the June resistance area around $97, but it has pulled back. The key question is whether this is simply a test of the top of the prior channel near $87.
If $87 holds, it is the level for bulls to use as a potential long area, with $97 as the upside target. If it fails, the next support is the 50-day moving average at $82.79.
Small-cap shares:
- Aoti Inc: above 75p, the target is £: AOTI has delivered a beautiful progression. The first target was around 47p, followed by 75p. Above 75p, the focus shifts to last year’s peak, almost exactly at £1. The chart is therefore looking for a move towards £1 by the end of next month, provided 75p remains the breakout level.
- CPP Group: bullish divergence needs a 20p close: CPP is beginning to show signs of recovery after a complete implosion. The RSI window is showing bullish divergence, where the price makes lower lows but momentum fails to do the same. There is also the possibility of a key reversal to the upside: a temporary new low followed by a break above the prior day’s resistance. A close above 20p, preferably on an end-of-day or end-of-week basis, would set up a move towards 30p.
- Eurasia: a sharp bounce, but 2.75p must break: Eurasia has risen around 22% without obvious news. The important point for both bulls and bears is that the shares have not yet broken the main February resistance line around 2.75p. A move above that level would point towards the 200-day moving average near 3.3p. The turnaround is accompanied by bullish RSI divergence, with price making lower lows while RSI stays broadly flat. A close above the 50-day line at 2.47p would be an encouraging result, particularly after the bear-trap gap reversal. The shares need to remain above the 2.3p to 2.5p support zone.
- Greencore Group: bull flag and a potential golden cross: Greencore has a bull flag forming around the 200-day moving average. This looks like a mid-move consolidation, which could lead to a move towards the top of the channel near 272p by the end of next month. There is also a potential upside key reversal, an unfilled gap higher and a rising 50-day average. The 200-day average is rising too, putting the shares into a potential golden cross phase, typically the strongest part of the cycle. The ideal technical requirement is to hold above 231p, the top of the recent gap.
- hVIVO: a 7.57p close could lead to 9p: hVIVO has staged a bear-trap rebound from below 6.75p. The key next step is an end-of-day close above the 50-day moving average at 7.57p. If that happens, the shares could head towards 9p by the end of next month. That is a reasonable rather than wildly optimistic proposition on the current chart.
- Orcadian: 18p opens the door to 25p to 30p: Orcadian has been trading against the uncertain backdrop of North Sea policy. The chart, putting the fundamentals aside, is looking increasingly constructive. An end-of-day close above the red resistance line at 18p could open the door to 25p to 30p by the end of next month. The shares are moving into a golden cross, with both the 50-day and 200-day lines rising, and have bounced above the 50-day average. That positive price action suggests the market is leaning towards a more favourable outcome for North Sea development, or at least something positive in that direction.
- Predator Oil & Gas: 3.1p needs to hold: Predator has edged higher and broken recent resistance at 3.1p. Holding above that level would put the June resistance at 3.6p in play. The obvious risk is the company’s long history of fundraising. The last raise was in May, so the technical hope is that the shares can reach 3.6p before the next fresh fundraise appears.
- Sintana: 20p breakout targets 23p: Sintana has already broken recent resistance around 20p. Above that, the target is the old June resistance at 23p, potentially by the end of next month or even sooner. RSI has moved back above the neutral 50 level for the first time since late April, and there is bullish divergence in place as well. An unfilled upside gap earlier in the week adds to the bullish argument.
- Tooru: above 0.16, look for 0.23: Tooru’s chief executive is getting the message out, and the chart is responding. The shares have broken the 50-day moving average at 0.16p. Above that level, the target is 0.23p by the end of next month, helped by bullish divergence and a management team that is clearly bullish about the company.
- Valereum: 2.4p is the key support: Valereum has broken above the 50-day moving average at 2.41p. If it can stay above roughly 2.4p, there is scope for a move towards 3.6p in a best-case scenario. The more realistic timetable for that target is the end of September rather than the end of next month. As ever, potential fundraises and outside noise remain risks, but technically the chart needs to preserve the 50-day line.
The key levels to keep on the screen
- FTSE 100: 10,610 support, then 10,750 for a push towards 10,900 and 11,000.
- DAX: 24,700 is crucial support, with 25,400 to 25,500 above.
- Dow: reclaim 52,000, then fill the gap towards 52,200.
- Bitcoin: $67,000 resistance and $63,100 50-day support.
- Ethereum: $1,950 resistance, $2,000 near-term objective and $2,160 longer upside level.
- Gold: 4,030 support, with 4,200 to 4,230 as resistance.
- WTI crude: $87 support and $97 upside target.
The pattern across the board is clear enough. Support levels are doing the work for now, but most of the stronger calls still require a proper daily close through resistance. That is the difference between a hopeful bounce and a chart that is genuinely back on the way up.
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.
