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, SpaceX, African Pioneer, Andrada, BSF, Cadence, GCM, Kendrick, Microlise, Mila, Oracle Power, Thungela, Tertiary, Tullow, and Wildcat.
It is a mixed but generally constructive charting picture. The major indices are holding key support areas, Bitcoin and Ethereum remain stuck in their ranges, and several UK smaller companies are beginning to show the sort of accumulation and bullish price action that can lead to sharper moves.
The key theme is simple: while major support levels hold, the bias remains towards higher targets. Here are the levels that matter across the FTSE 100, DAX, Dow, crypto, commodities and a selection of UK shares.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100: Back Near Former Resistance
The recent FTSE 100 dip looked somewhat random at first glance, but the best explanation is a pullback towards the old April and July resistance area around 10,700. Former resistance can become support, and that is the technical test currently in play.
The RSI has rebounded through its neutral 50 area, which is an encouraging sign. For background on this commonly used momentum indicator, see Investopedia’s guide to the Relative Strength Index.
An end of day close above 10,820 would improve the situation considerably and point towards a retest of the record highs, with 11,000 the obvious psychological objective.
On the downside, the 50 day moving average near 10,617, together with the floor of the rising channel from March, represents the main support and the worst case area for now.
DAX: Channel Resistance Remains the Main Issue
The DAX is still pressed against the top of its rising trend channel from March. The key resistance is around 26,500. A sustained move through that level would open the way towards the projected February resistance line near 27,300 by the end of next month.
For the bullish case to remain intact, the index ideally needs to stay above 26,000. That is the key line in the sand.
Dow: Support Above the Gap Keeps the Bias Higher
The Dow has found support at, or just above, the top of the gap created earlier this month, around 53,600. That is a useful sign after the recent retreat.
A gap fill remains possible, but at present it would be viewed as a buying-style reset rather than the start of a major breakdown. The 50 day moving average, currently near 52,300, is the broader worst case support.
With the RSI holding in the upper 50s and the old July resistance level offering support, the technical bias remains higher rather than lower.
Bitcoin: Still Waiting for the Range Break
Bitcoin has been quiet, trading either side of a rising 50 day moving average near $63,600. There is not much to get excited about until the range gives way.
The current trading band is roughly:
- Support: $61,000
- Resistance: $67,000
- Upside target after a breakout: the 200 day moving average near $69,100
The market could still be consolidating ahead of a move in either direction. For bears, a break below the October resistance line would raise the risk of a test towards the March support projection near $55,000. That would be the near-term bearish extreme.
Ethereum: A Punchy Setup That Needs to Deliver
Ethereum is also moving slowly, despite what looks like a decent technical setup. The price has been consolidating above a rising 50 day moving average at $1,842, a position that would normally be expected to produce a quicker upside response.
The immediate target is the 200 day moving average near $2,080, ideally by the end of the month. The RSI has rebounded around the 50 level, reinforcing the constructive setup.
A drop below $1,700 is not currently expected. More realistically, the rising 50 day line should provide support. It is a punchy call, but it is also a punchy chart setup.
Gold: Bull Flag Consolidation Points Higher
Gold appears to be consolidating well, potentially in a bull flag formation around the 4,320 area. A bull flag is a pause within an existing advance, and it can provide the base for the next move higher.
The initial upside target is the 200 day moving average near 4,550. In a stronger scenario, the price could revisit 4,600 or above by the end of next month, an area that acted as resistance during the decline in May and early June.
WTI Crude Oil: Neutral Range, But the Glass Is Half Full
WTI crude oil is almost exactly in the middle of its wider $74 to $93 range, which makes it technically neutral at present.
However, there are reasons to be cautiously positive. The market has bounced at RSI 50 over the past couple of sessions, while the 50 day moving average near $78.61 is acting as the operative support level.
As long as crude remains above that moving average, the preferred scenario is a move towards $87, potentially filling the gap and approaching channel resistance near $88.
SpaceX: A Close Above the 50 Day Line Is Needed
SpaceX ended last week beneath the 50 day moving average at 143.91. The immediate requirement is an end of day close above that level. If achieved, the next upside destination would be the 200 day moving average at 156 or higher.
The RSI has recovered above its neutral 50 level, so this currently looks more like positive consolidation than outright weakness.
For bears, any failure near the 50 day line could still provide a shorting opportunity ahead of a retest of the 130 area. But the positive RSI action means the bullish breakout case deserves attention.
UK Small Caps:
- African Pioneer: V-Shaped Bull Flag: African Pioneer is attempting to make the case for becoming the new Kendrick. The shares have moved above the second major target at 2.4p, and the next objective is 3.2p, potentially by the end of the month or sooner. The chart resembles a V-shaped bull flag, with both the 50 and 200 day moving averages rising. There have also been three RSI bounces above neutral 50. Technically, it all looks in good order.
- Andrada Mining: Positive Candles and a 6p Target: Andrada Mining is pushing up well. The resistance line is now more accurately placed at about 4.25p. Above that level, the target is the top of the channel near 6p, potentially by the end of next month or even sooner. The shares are supported by rising 50 and 200 day moving averages, following an RSI 50 rebound. More importantly, the recent candles have repeatedly opened near their lows and closed near their highs. That pattern tends to suggest genuine accumulation rather than a one-off spike. Ideally, Andrada now holds above 4.25p.
- BSF: Gap Fill Potential Towards 2p: BSF has risen sharply from the lows. While the shares remain above the 50 day moving average at 1.05p, there is scope for a gap fill towards 2p between now and the end of next month. It is a punchy target, but it is supported by recent RSI 50 rebounds, a move above the 50 day line and a gap higher in the price.
- Cadence: Selling Climax May Have Marked the Turn: Cadence has been on the back foot for some time, but the chart is beginning to improve. The shares have formed a higher low compared with early August and are now above the rising 200 day moving average near 4.75p. The upside target is around 7p by the end of next month. The selling climax earlier in the month may have cleared the way for a more sustained recovery.
- GCM: Break Above 4.4p Changes the Picture: GCM has finally broken through the 4.4p resistance area. The shares are now above the old March and April resistance zone around 8.9p, putting 12p into play over the coming days. The fallback scenario would be a retest of the 200 day moving average near 6p before the next push higher. Even so, the chart looks considerably better following the breakout.
- GRX: Strong Price Action Supports a Move Into the Low 60s: GRX has broken recent resistance at 52p. That move gives an initial target of at least 62p, while the upper parallel of the rising trend channel points to a longer-term possibility above 90p. The latter target may take until September or October, if it is achieved at all, but the shorter-term low 60s objective appears more realistic. The reason is the quality of the recent candle action. Repeated opens near the low and closes near the high, followed by step-like price progression, are among the stronger indications of accumulation and constructive price action.
- Kendrick: Bull Flag Still Targets 12p: Kendrick remains in a very attractive bull flag formation based around 7.25p, above prior resistance. The RSI has rebounded above 50, adding to the positive setup. The chart is simply waiting for a clearer breakout. For those prepared to anticipate the move, the technical target is 12p by the end of next month or sooner. It would also help to see the 50 day moving average begin to rise properly alongside the 200 day line.
- Microlise: Intriguing Accumulation Pattern: Trying to forecast merger and acquisition activity is generally a thankless exercise, but Microlise is charting rather intriguingly. Several recent sessions have shown candles opening at the low and closing at the high, which points towards proper accumulation. The initial target is 55p. Above that, the 200 day moving average and the upper parallel of the rising trend channel from May could take the shares as high as 70p by the end of the month.
- Oracle Power: Golden Cross Potential, With One Caveat: Oracle Power is looking more chipper, provided there is no fundraising surprise. The chart is moving towards a potential golden cross by the end of the month, where the shorter-term moving average rises above the longer-term average. For more on the concept, see this overview of the golden cross. The initial target is 0.06p, with a best case target of 0.08p by the end of next month. Support is near 0.04p.
- Thungela: Above the 50 Day Moving Average for the First Time Since June: Thungela has broken above the 50 day moving average at 478p for the first time since June. While the shares stay above that level, the minimum target is the 200 day moving average near 520p. The best case is a move to 606p by the end of next month, where the upper boundary of the rising trend channel from October last year comes into play. In the meantime, a dip into the 480p to 490p area would be regarded as a buying opportunity under this chart scenario.
- Tertiary Minerals: Gap Through the Rising 50 Day Line: Tertiary Minerals has responded well to a positive announcement, gapping through a rising 50 day moving average. Both the 50 and 200 day moving averages are rising, which is the kind of alignment that technical traders like to see. Above 0.076p, the target is the top of the range around 0.1p, possibly as soon as the end of the month.
- Tullow Oil: Key Reversal Gives 20p Potential: Oil shares are generally doing well, and Tullow Oil is the standout here. The shares have found support above a falling 50 day moving average and registered a key reversal to the upside. The immediate challenge is to clear congestion around 16.12p. Once through that zone, the chart points towards 20p by the end of next month or sooner. Tullow can be a slow mover, but several recent RSI 50 rebounds suggest that buying interest is building underneath the price.
- Wildcat: Aquis Move Could Put 0.16p Back in Sight: Wildcat should, in theory, be preparing for a stronger move ahead of its planned transition to Aquis. The company announced that plan earlier in the month, alongside the wider gold production narrative. With a market capitalisation around the £2 million minimum required for Aquis, the chart remains interesting while support near 0.06p holds. The target is a spike back towards 0.16p or higher, the level seen last year, by the end of next month.
The Bottom Line
Across the larger markets, the technical picture is more supportive than alarming. The FTSE 100, DAX and Dow all have important support levels beneath them, while gold and crude oil retain constructive setups.
Crypto remains the exception, with Bitcoin and Ethereum needing a clean range break before the next major directional move becomes clear.
Among the UK smaller companies, the most interesting theme is the reappearance of strong candles, RSI 50 rebounds and rising moving averages. Those are the signs to look for when a long period of drift begins to turn into a proper recovery.
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.
