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, ASOS, Catenai, Empyrean, Gately, IG Design, JD Sports, Reach, Sintana, Tern, Tooru, Vodafone.
The technical picture is looking increasingly constructive across the major equity indices, with the FTSE 100, DAX and Dow all holding key moving-average support. Crypto is in recovery mode too, while crude oil has rather dramatically had the rug pulled from underneath it.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
The common theme is simple enough. Where prices are holding above rising 50-day moving averages and RSI is recovering around the neutral 50 level, the bias remains to the upside. Here are the levels that matter.
FTSE 100: 11,000 Is the Punchy Target
The FTSE 100 has rewarded those backing the TACO trade, namely the idea that Trump would chicken out. The market had already been telegraphing a positive outcome for a while, bouncing at or above its rising 50-day moving average and respecting the floor of the rising channel from March.
The index has pushed through the initial July resistance at 10,750, with merger and acquisition activity helping to deliver the long-awaited value case for the UK market. RSI 50 rebounds over recent weeks add another positive sign.
- Upside target: 11,000 by the end of August, which would mean record highs.
- Key support: 10,620, the old March resistance line that has now been broken.
- Technical view: The upside case remains valid while 10,620 holds.
DAX: A Bear-Trap Gap Reversal
The DAX gapped up through the 25,400 to 25,500 area, completing what looks like a bear-trap gap reversal. That is a strong piece of price action, especially after the market had been testing the lower end of its recent range.
The next technical objective is the top of the rising channel at 26,300 by the end of next month. That also ties in with a longer-term resistance area, giving the target additional chart significance.
- Upside target: 26,300.
- Key support: The rising 50-day moving average around 24,890.
- Technical view: Stay above the 50-day line and the bullish recovery remains in play.
Dow: Back on Track After the 50-Day Bounce
The Dow has not fully caught up with the fall in oil, but the chart was already pointing towards a rebound. The market bounced above a rising 50-day line on Thursday, making Friday’s open the obvious buy point from a technical perspective.
The immediate aim is the July resistance area at 52,600, followed by a retest of 53,300. On the downside, the 50-day line around 51,400 should provide support. It also lines up with an April uptrend line, so there is no reason at present to expect a deeper slide.
Cryptocurrency Charts: Bitcoin and Ethereum in Recovery Mode
Bitcoin needs to hold 63,300
Bitcoin is trading above a rising 50-day moving average, which is the key positive. The minimum upside objective is $67,000, provided the price continues to hold above the 50-day line at $63,300.
Best case, Bitcoin reaches the 200-day moving average near $72,000 by the end of next month. The RSI is also holding an uptrend line from around the neutral 50 area, consistent with a recovery rather than a fresh breakdown.
Ethereum: 1,850 Has Turned Into Support
Ethereum is reflecting the constructive Bitcoin setup. The price is consolidating above a sharply rising 50-day moving average and above the old 1,850 resistance level from last month.
As long as 1,850 remains support, the next objective is the 200-day moving average at roughly 2,134. The chart is not spectacular, but it is doing enough to keep the recovery case alive.
Gold: 4,030 Is the Breakout Line
Gold has gapped higher overnight, continuing the slightly counterintuitive recent pattern of gold rising alongside more peaceful geopolitical headlines. There is not much confirmation from the momentum data yet, but the price chart gives a clear range to work with.
- Breakout support: 4,030.
- Near-term target: The 50-day moving average at 4,221.
- Missing ingredient: RSI needs to reclaim neutral 50, something it has not done since early May.
For now, the working range is 4,030 to 4,220. Holding above the lower level keeps the near-term upside argument intact.
WTI Crude Oil: The Rally Is Under Pressure
Crude oil has been hit hard. Friday’s price action was already looking dodgy when the hoped-for move towards $97 failed to materialise. It looked as though the market was well informed ahead of the reversal, which is often how these moves feel once they are underway.
The critical level is the 50-day moving average at $82.40. A sustained move below that would point towards the 200-day moving average around $75 to $76, potentially marking the end of the substantial rally.
The bigger issue is that even with a very difficult geopolitical backdrop, crude has struggled to remain above $80 on a consistent basis. That is not the behaviour of a market with a durable bullish trend.
Small-Cap Shares:
- AOTI: 102p Is the Next Level: AOTI has delivered the goods. The previous target at 74p has been reached, and the next level is 102p, an old 2025 resistance area. Above that, there is not much in the way on the chart.
- ASOS: Bull Flag Points to 445p: ASOS has formed a bull flag around the old 340p resistance zone and has broken recent resistance at 370p. That opens the door to a fresh leg higher towards 445p by the end of next month. Ideally, the shares hold above the recently broken 360p level. That would keep the bull-flag interpretation clean and the upside momentum intact.
- Catenai: A Bounce Needs 0.15p to Break: Catenai is near its lows but beginning to bounce, with some volume returning to the shares. The key is a break through recent resistance at 0.15p. If that happens, the next target is the 50-day moving average at 0.20p.
- Empyrean: Above Rising 50-Day and 200-Day Lines: Empyrean has decent volume, although the more important point is the chart structure. The shares are rising above both rising 50-day and 200-day moving averages. Support is around 0.06p. Above that, the next objective is 0.10p over the coming month.
- Gateley (Holdings): A V-Shaped Bull Flag: Gateley has formed a neat V-shaped bull flag above the 50-day moving average. The target is the top of the falling trend channel at 67p over the next couple of weeks. The setup remains valid while the shares stay above the 50-day line in the 56p to 58p area.
- IG Design: Moving Towards 110p: IG Design is pushing to new highs and remains on course for a move towards 110p, the top of a rising trend channel that has been in place since February. The former resistance level at 87p is now the important support marker. Hold above that and the 110p target remains the obvious one.
- JD Sports: Breakout Through 90p: JD Sports has broken recent resistance through 90p. Above that level, the next target is 102p by the end of next month. It is one of the larger-cap names worth monitoring while compelling small-cap setups remain relatively thin on the ground.
- Reach: Bottom-Fishing Setup Towards 48p: Reach is a bottom-fishing situation. The shares overshot below a price channel that had been running through 40p, a move that should have flushed out weaker holders. There is also an RSI bullish divergence, supported by improving volume. The initial objective is a bounce back towards 48p, which was the old May support level. Even a rebound to that level would be useful, irrespective of what happens after.
- Sintana: A Close Above 21p Opens the Door: Sintana, also known as SEI, held the 18p area and has delivered on both the fundamental and technical cases. The immediate requirement is an end-of-day close through 21p.
- First target: 24p to 25p, around the 200-day moving average.
- Best-case target: 26p, at the top of the gap left in May.
- Key support: 18p.
- Tern: Strong Chart, but Fundraising Risk Remains: Tern has continued to rise despite recent fundraisings, which naturally raises the question of why the shares are still moving higher. Technically, the answer is that the price is above a rising 50-day moving average and has found support around 1.15p. The best-case scenario is a move to the top of the broadening triangle from October 2024, around 2.5p. However, future fundraising remains the major caveat and cannot be ignored.
- Tooru: Recovery Above the 50-Day Average: Tooru has broken above its 50-day moving average at 0.18p. Above that, the target is the top of the channel at 0.23p, potentially by the end of next month or earlier. The chart has a bullish divergence, and the improving investor-relations activity adds to the renewed interest in the company.
- Vodafone: A Proper Breakout Could Target 128p: Vodafone has been a dog for a very long time, but the chart is becoming much more interesting. The shares are rising on decent volume above the old broken resistance line at 113p. Above 113p, the target is the top of a broadening triangle at 128p. The unfilled gap to the upside, rising 50-day and 200-day averages, and RSI rebounds above 50 all support the breakout argument. The final trigger is an end-of-day close above 120p. Achieve that, and the path towards 128p should be open.
The Key Levels to Keep on the Radar
- FTSE 100: Support 10,620, target 11,000.
- DAX: Support around 24,890, target 26,300.
- Dow: Support 51,400, targets 52,600 and 53,300.
- Bitcoin: Support $63,300, targets $67,000 and potentially $72,000.
- Ethereum: Support 1,850, target around 2,134.
- Gold: Support 4,030, target 4,221.
- WTI crude: 50-day line at $82.40, with $75 to $76 in focus below it.
- Vodafone: A close above 120p points towards 128p.
The main bullish setups remain the markets and shares holding above rising 50-day moving averages, preferably with RSI recovering through 50. The main warning sign is crude oil, where failure to sustain higher levels is starting to undermine the larger rally.
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.
