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, African Pioneer, CloudCoco, Defence Holdings, Filtronic, Fragrant, First Class, Halo Minerals, Marechale, Rc365, Seraphim, World Chess.
There is a bit more clarity creeping back into the charts now, although not every market is playing ball. Some indices are trying to stabilise after sharp tests of support; crypto still looks heavy; gold has turned into one of the bigger disappointments; and a handful of London small caps are setting up rather neatly.
As ever, these are chart-based observations, not hard recommendations. The key is to focus on the levels that matter and the shape of the moves around them
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100: rebound from a bear trap
The FTSE 100 looks a little more encouraging after bouncing from the floor of a falling trend channel. The dip beneath the May support zone looked like a classic bear trap, with the market briefly slipping under support before recovering.
That kind of action often matters because it suggests sellers may have overplayed their hand. The rebound from the 101.27 area was constructive, and the rising 50-day moving average adds to the more positive tone.
For now, the chart points towards 104.80 as the first upside target over the coming days, provided the index holds above the old May support near 101.50. If that support remains intact, the recent recovery has a decent chance of extending.
DAX: 24,000 looks like the line in the sand
The DAX has also respected a major support zone, with the 200-day moving average acting as a worst-case area for buyers to step in. That support came in around 24,000, and so far the market has done what it needed to do there.
There is also a case for redrawing the price channel from March on a slightly flatter angle, which makes the recent bounce look cleaner and more natural than before. Sometimes a chart simply needs tidying up to reflect how price is actually behaving.
As long as the DAX stays above 24,000, the near-term objective is a return to recent resistance at 25,000. Beneath that, the broader post-April support area around 23,600 to 23,700 still matters. On a more optimistic view, 26,000 remains possible by the end of next month rather than this month.
Dow: a nasty shakeout, but support still holding
The Dow gave bulls a fright by probing below the 50,000 level. That move looked uncomfortable, but it may end up being another case where the trend channel needed a slight adjustment rather than a full breakdown.
The important thing now is that price has recovered back above the big round number, and while the market remains above the 50-day moving average at roughly 49,300, the broader recovery case remains alive.
The upside target is still the top of the channel and potentially fresh record highs near 52,000. The only note of caution is momentum. The RSI dipped below the neutral 50 mark, and the market has not yet fully retested the 50,000 zone. So the setup is improving, but it is not entirely straightforward yet.
Bitcoin: still soggy until 65,000 is reclaimed
Crypto remains heavy, and Bitcoin still looks vulnerable despite a small recovery. The main positive is that the move below February support just above 60,000 has so far behaved like a narrow bear trap, with the market bouncing back quickly after slipping under that level.
That rebound keeps the possibility of a base alive, but it is not enough on its own. Bitcoin still needs to reclaim the old March support around 65,000 to confirm that a meaningful double bottom is in place.
Until then, this remains a consolidation with no clear resolution. With both the 50-day and 200-day moving averages falling sharply, the path of least resistance still leans towards further testing below 60,000 rather than an immediate upside breakout.
Ethereum: steadier than Bitcoin, but still at risk
Ethereum has held up slightly better on the way down, but the technical risk has not gone away. While price remains below the February support near 1,753 dollars, the chart still leaves room for another test of lower support levels.
The first key area sits around 1,500 dollars, where support appeared earlier in the month. If that gives way, the lower boundary of the falling trend channel from last July points all the way down towards the 1,000 dollar region.
So although Ethereum has looked a little more stable than Bitcoin, the chart still needs a stronger recovery before confidence can return.
Gold: oversold, but still disappointing
Gold has become one of the weaker charts in the pack. The market retested March support around 40.98 and then slipped further, with the low stretching down to around 40.36. That is not the kind of action bulls would have wanted to see.
The longer price stays below 49.8, the greater the risk of a move down towards the floor of the falling trend channel from January, which currently projects to around 30.80 by the end of next month.
The one encouraging feature is the RSI. It has moved into oversold territory for the first time in quite a long while, and the last time that happened, back in 2023, it marked the low of the move. So while the chart looks bruised, oversold conditions may eventually provide the seed for a recovery.
WTI crude oil: rallies still capped for now
Despite renewed geopolitical noise from the Middle East, crude oil is still stuck inside a falling trend channel. The market had been expected to struggle around 92 to 93 dollars, and that cap has held so far.
If a sudden spike develops on the back of a fresh shock, the upper boundary of the channel and the 50-day moving average suggest room towards roughly 96.65 dollars. But absent that kind of event, the chart still looks more likely to drift lower.
The lower boundary of the channel currently points to an 83 dollar target in the coming days. For now, rallies are suspect unless price can break convincingly through the top of that downtrend structure.
Small-Cap charts to watch
African Pioneer: rebound from the 200-day line: African Pioneer has bounced from a rising 200-day moving average at around 1.04p. That keeps the broader range and channel structure intact. While the shares remain above that level, the chart points towards the top of the range and the top of the rising channel at around 1.6p by the end of next month, potentially sooner. The RSI has also rebounded from the 50 area, which often supports the case for further upside. Holding above 1p remains important.
CloudCoco: waiting for the cleaner breakout: CloudCoco has taken longer than hoped to get moving, but the setup is still improving. The key level is the May resistance around 0.22p. A firm break above that would give a more definitive signal that the shares are ready to move. If that breakout comes through, the best-case target is a retest of the top of the range near 0.35p by the end of next month. The rising 50-day moving average near 0.20p is the level that needs to hold underneath.
Defence Holdings: bull flag points higher: Defence Holdings has risen for a second day running, which in itself has been a bit of a surprise, but the chart is actually shaping up very well. There is a bull flag formation above the rising 50-day moving average, and the shares have moved through that line with a gap to the upside. The minimum upside target is the 200-day moving average around 1.61p. A stronger move could take the shares up to 1.8p by the end of this month, and on current form that does not look especially demanding.
East Star Resources: rising channel still in force: East Star has been building constructively inside a rising trend channel that stretches back to last summer. As long as the shares remain above the 50-day moving average at 3.69p, the top of that channel near 6p stays in view. That makes it one of the tidier continuation charts among the smaller names.
Filtronic: bounce from the 50-day line: Filtronic remains one of the stronger momentum names, even though the pullback from last month was frustrating. The shares are now bouncing from the 50-day moving average at around 3.32. Initial resistance comes in around the May resistance line at 3.70. If that gives way, the top of the channel suggests a move as high as 5.50 by the end of August. The broad idea here is simple. The trend is still positive, and this latest dip may simply have been a pause inside a larger upward move.
Fragrant Prosperity: consolidation above the 50-day average: Fragrant Prosperity is nudging higher and the setup is better than it might first appear. The shares have been consolidating above a rising 50-day moving average after coming off the lows. The minimum target is the top of the falling trend channel from this time last year at around 0.58. In a stronger scenario, the shares could push towards the December resistance level near 0.9 by the end of August.
First Class Metals: fundraising absorbed well: First Class Metals seems to have taken its recent fundraising in stride. Rather than weighing on the chart, the shares have bounced and held above the top of the gap around 3.5p. While that area continues to hold, a retest of 4.5p looks plausible, possibly by the end of this month. In chart terms, it is behaving about as well as could have been expected after the placing.
Halo Minerals: improving ahead of resistance: Halo Minerals has an improving look after bouncing within a falling trend channel. The shares have recovered well over recent days, and the next important test is the recent resistance around 8.75p. A move through that level would open the way towards the top of the channel near 10.5p in the near term. The best-case scenario by the end of this month would be a push to the 50-day moving average at around 11.25p. For now, recent support at 8p is the level to watch on the downside.
Marechale: one of the standout performers: Marechale has been among the best performers over recent weeks and days. The shares are bouncing from a previous upside target in the 6.4p to 6.5p area, and that keeps the momentum theme intact. On the chart alone, a best-case target of 10p by the end of this month remains possible. That is a purely technical assessment rather than a fundamental one, but the strength of the recent move is hard to ignore.
RC365: support emerging after the spike and pullback: RC365 has already had the big spike and the inevitable pullback that followed. What matters now is where support is forming, and the chart is finding it near the old January resistance at 2.3p. That area may prove to be a useful marker for anyone tracking the setup. While the shares remain above it, the first major target is around 3.1p in the coming days.
Seraphim: gap support holding: Seraphim has settled after its gap higher and is now finding support around the base of that gap near 190p. That is constructive because it suggests the market has accepted the higher range rather than immediately filling the move. As long as that support remains in place, a retest of the recent resistance through the 235p zone looks achievable. The chart still has a tradable feel to it if momentum in the space sector remains supportive.
World Chess: perhaps finally a base: World Chess has had a long and painful bear run, but there are early signs that a proper base may be forming. The RSI moved to very oversold levels, and the price action now hints at a rising trend channel base developing. While the shares stay above recent broken resistance at roughly 0.23p, the best-case target by the end of next month is around 0.47p at the top of that channel.
It is still an early-stage recovery idea, but at least the chart is beginning to show some structure after a prolonged decline.
The bigger picture
There are two broad themes running through the market at the moment.
- Major indices are trying to recover from support, with the FTSE, DAX and Dow all showing signs that recent weakness may have been more of a shakeout than the start of a larger breakdown.
- Risk assets are more mixed elsewhere, with crypto still under pressure, gold looking unexpectedly poor, and oil trapped in a downward-sloping channel despite geopolitical tension.
In small caps, the cleaner opportunities are often where price is either bouncing from a respected moving average or pushing through a clearly defined resistance level. That is where the structure becomes easiest to read.
The levels to keep in mind from here are straightforward: 101.50 on the FTSE 100, 24,000 on the DAX, 49,300 on the Dow, 65,000 on Bitcoin, 1,753 dollars on Ethereum, and 49.8 on gold. If those charts improve above key levels, confidence returns. If they fail, the downside risks remain very much alive.
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.
