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, Eco, Enquest, Moonpig, Quantum Helium, Rc365, Raspberry Pi, Strategic Minerals, Touchstone, UK Oil & Gas.
The market may feel as dead as a dodo in places, but the charts are still throwing up some clear setups. A few of the calls are starting to work properly now, especially where breakouts have finally begun to stick instead of immediately reversing. That is the main theme here: several major indices are pushing higher, crypto has improved, gold is trying to join in, crude looks like it may be building a rebound, and a handful of small caps are setting up interesting technical moves.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100 breaks higher and keeps the bullish case alive
The FTSE 100 finally delivered on the bullish idea. A call for the market to head higher and break out of its falling trend channel was confirmed, which is no small thing given how often long calls on the Footsie get punished almost straight away.
The key level was the resistance line around 10,610. Once above that, the market opened the door not just to 10,720, which has already been reached, but also to the top of the broader channel and potentially fresh record highs through 10,900. That move could come by the end of this month, or if the market continues to drift, by the end of next month.
The technical backing has been solid enough:
- RSI 50-plus rebounds have supported the upside view.
- The 50-day moving average has started rising.
- Since June 24, support has been coming in above that rising 50-day line.
That combination usually points to a market that is quietly strengthening under the surface.
DAX looks even stronger after a proper breakout
The DAX has gone a step further. This was not just a nudge higher. It was a proper breakout through the May resistance area around 25,000.
The target for some time has been the top of the rising channel from March, initially around 26,300. Given the strength of the move, that target can now be upgraded to 26,500 by the end of this month, provided the index stays on the right side of 25,500.
If there is any pullback, it is hard to expect much below 25,000 now. The chart structure is supportive:
- The 15-day and 200-day moving averages are both rising.
- The RSI is around 65, so momentum is firm but not yet overbought.
This remains one of the cleaner index charts around.
Dow pushes to the top of the channel
The Dow has also been behaving well, closing right at the top of its rising trend channel from April. If it can break through 52,900, the next target becomes a projection from the November resistance line, which points as high as 53,800 by the end of the month.
One of the more bullish features here is the pattern formed in the second half of June. It looks like a rising flag, and that is about as strong a continuation signal as you tend to see.
There is always the chance of a rug pull, of course. If that happens, support around 51,700 from earlier this month should be the first line of defence.
The one cautionary note is momentum. The RSI is overbought at 70. Even so, price action still suggests the bulls are in control for now.
Bitcoin starts to look more constructive
Bitcoin improved meaningfully. The support line has shifted in a more positive direction, and price managed to get back above the old resistance line from May, roughly 61,000.
Above that level, the immediate aim is the 50-day moving average near 67,000 by the end of this month. That is a fairly punchy target, but the chart is giving it a chance.
The key technical positives are:
- A move back above the RSI 50 level.
- A clear spell of bullish divergence, and in fact quite a sharp one.
That does not necessarily mean a straight-line rally, and there is still a possibility of fading back towards the 60,000 area later on. But at the very least, the setup supports an intermediate rebound.
Ethereum has arguably done even better
Ethereum actually looked stronger than Bitcoin over the latest session. It bounced at or near the 1,500 area and pushed on from there.
With the RSI moving through the neutral 50 level, the next target is the spring resistance line around 1,845, with the 50-day moving average at 1,824 just below that.
The near-term structure stays constructive as long as Ethereum holds above 1,643, which was recent broken resistance.
Gold tries to follow the crypto improvement
Gold has also started to look a bit better, which is slightly unusual given how closely that improvement mirrors what is happening in crypto. Still, the chart is the chart.
Recent resistance around 4,110 has been broken. Above that, the next target is the January resistance line around 4,310 by the end of this month, or possibly sooner.
The best-case scenario would be a move towards the 200-day moving average at 4,484 by the end of July.
The main negative is that the RSI is still not above the neutral 50 mark. Even so, bullish divergence has appeared here too, which reduces the importance of that warning sign in the short term.
WTI crude may be shaping a gap-fill rebound
Crude oil remains messy, but there are early signs of a rebound setup. Price dipped below the gap floor around 67.83, reaching roughly 67.04, then recovered back above the gap area.
That opens the way for what looks like a gap-fill rebound, with the 200-day moving average at 74.15 as a best-case target.
One interesting point is that the RSI is still oversold. That suggests there may be a bit more room for a relief rally even if the market struggles again after that.
Small – Caps
- Eco Atlantic holds its gap and keeps momentum alive: Among the smaller stocks, Eco Atlantic stands out. After rallying from December, it has managed to hold on to most of those gains, which is often half the battle in this sort of name. The key recent event was the gap higher last week, and importantly, that gap has held around 47p. Above there, the minimum target becomes the 50-day moving average at 56p. Beyond that, a retest of the stronger levels near 70p looks possible, perhaps by September if momentum continues.
- EnQuest keeps a strong oil-stock formation: EnQuest also looks constructive. The stock has bounced above the gap area around 21p, and more importantly, it bounced above a rising 50-day moving average. With the RSI around 57, the chart supports a full retest of the recent highs towards 27p by the end of this month. There is also a case for saying the stock broke a resistance line from last month around 22p. If that is right, then staying above that level now becomes important.
- Moonpig breaks out of its rising channel: Moonpig is not the sort of stock that normally gets much attention here, but the chart is interesting. Price has broken above the top of a rising trend channel at 255p. It looks a touch hesitant right now, but while the stock stays above the 250p zone, the chart still points to another leg higher. The upper parallel of the rising trend channel from September suggests a target as high as 292p, perhaps by September.
- Quantum Helium needs a clean break but the setup is improving: Quantum Helium is trying to get back on track. The shares are just about back inside their rising trend channel around 3p. Ideally, the stock now holds above the 50-day moving average at 2.85p and then works its way up to fill the gap at 4p. For the more cautious approach, it probably makes sense to wait for an end-of-day close through 3.44p, which is recent resistance, before targeting 4p.
- RC365 remains volatile but has strength underneath: RC365 is still enigmatic, but it did manage to gap up through recent resistance at 2.65p. Above that, the chart points towards a retest of last month’s resistance through 4p, potentially by the end of next month. It may not be the cleanest move in the world, but there are some useful positives under the surface.
- Raspberry Pi continues to behave well: Raspberry Pi has been one of the nicer charts around simply because it has gone up and, crucially, stayed up. That is a rarer quality than it should be. The stock has broken last month’s resistance line around £8.50. The longer it remains above that area, the better the chance of a move towards £9.30 by the end of this month. After that, a retest of the year’s best levels, or the all-time best levels, through £10.70 becomes possible by the end of the summer. The RSI around 56 is in a comfortable zone for further upside. One thing worth watching is the top of the gap around £8.77, which may still act as resistance. Ideally, a daily or weekly close above that would strengthen the case for another leg higher.
- Strategic Minerals needs one more breakout: Strategic Minerals had some lively news, but the market has not yet managed to force the shares through the key resistance line from April. That level comes in around 4.55p. If the stock can break above that in the coming sessions, the chart opens up towards 5.4p by the end of this month. The obvious issue is that the shares have already come a long way, so profit-taking is always a risk. Even so, it would help if support can hold around the 3.8p to 3.9p area.
- Touchstone Exploration may be trying to reverse: Touchstone Exploration has been a graveyard for bulls for quite some time, and it may not be finished with that role yet. But there is at least the beginning of a potentially interesting reversal setup. The stock has gapped up after having gapped down back in May. That kind of move can mark a change in character. The obvious confirmation would be an end-of-day close through the 50-day moving average around 7.60p. Even a move through roughly 7.50p could start to improve the picture. For now, the main positive is that a floor seems to have formed near 6.80p.
- UK Oil & Gas has signs of life, with the usual caveat: UK Oil & Gas has become more interesting technically. There is an unfilled gap to the upside from June 29, and the shares have broken above the 50-day moving average for the first time in many months. As long as the stock holds above that 50-day line around 0.01p, the chart points towards the top of the recent range around 0.015p. A best-case move could take it to roughly 0.013p by the end of this month. There is, however, the standard warning. This is a company known for frequent fundraising, so the technical setup is more advisory than compulsory.
Final chart take
The broad picture is more constructive than it has been for a while. The FTSE 100, DAX and Dow are all leaning bullish, with the DAX looking especially clean. Bitcoin and Ethereum have improved enough to support rebound targets, while gold is trying to build on similar divergence signals. Crude remains awkward, but the gap-recovery setup gives it a chance.
Among the stocks, Raspberry Pi, EnQuest, Eco Atlantic and Moonpig are some of the more interesting charts from a technical point of view, while Quantum Helium, RC365, Touchstone Exploration and UK Oil & Gas all need a little more care but have started to flash something more promising.
For now, the key theme is simple: where breakouts hold above rising moving averages and RSI keeps rebounding around 50, the benefit of the doubt stays with the upside.
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.
