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, Arrow, Coinsilium, Rentokil, Renalytix, Rockfire, and Touchstone.
Among the individual shares, some setups are more encouraging. Arrow Exploration has pushed through an important channel boundary, Coinsilium and Rockfire are building towards golden crosses, and reversal patterns are putting Rentokil and Touchstone back into contention.
These are the technical levels for the October 22 rundown. The targets are conditional: holding the relevant support matters just as much as the upside projection.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
Stock Indices: The Dow Stands Apart
FTSE 100: A Pivotal Test Around 10,700
The FTSE 100 is sitting around the middle of its range, slightly below the broken July resistance line near 10,700. It is also below a falling 50-day moving average at approximately 10,708. That is not an especially comfortable combination.
The risk in the run-up to the Budget is a retreat towards the floor of the rising channel and the 200-day moving average, around 10,500, before another rebound can develop.
The relative strength index, or RSI, has slipped just below its neutral 50 level. Only just, admittedly, but that leaves the session looking pivotal if the index is to preserve its recent strength. Recovering the nearby resistance and moving average would improve the picture; remaining beneath them leaves the lower channel area in play.
DAX: A Second Failure at the 50-Day Line
The DAX has suffered a second rejection around its falling 50-day moving average. The latest attempt actually reached the line, unlike the preceding effort, but the outcome still points towards resistance rather than a convincing recovery.
That raises the prospect of a test of the rising trend channel drawn from January. Its floor sits around 24,900, alongside the 200-day moving average.
There is another warning in the RSI: a double failure in the low 50s. That particular pattern has historically been an especially unhelpful sign in this approach to charting. Together with the moving-average rejection, it keeps the emphasis on a potential support test.
Dow: A Break Higher With 53,300 in Sight
Unlike the FTSE and DAX, the Dow has pushed through its falling 50-day moving average, around 52,370. Above that line, the next objective is a gap fill towards 53,300, potentially over the coming days.
The best-case extension is the top of the range near 54,000 by the end of November.
The important downside marker is 51,900, which has provided support over the preceding week. Losing that level would begin to undermine the bullish setup. For now, however, a rebound from above RSI 50 and the break through the 50-day line suggest the direction is higher.
Bitcoin and Ethereum: Holding Support Makes the Difference
Bitcoin: Still Above the Rising 50-Day Average
Bitcoin continues to dither just above its rising 50-day moving average at approximately 81,300. The immediate range runs from that support to the September and October resistance area around 87,000.
There is not much point getting more ambitious until that upper boundary is dealt with. First, Bitcoin needs to keep the 50-day line beneath it.
A break below the average would bring the lower end of the wider range, around 76,000, into consideration over the following few weeks. Holding above it keeps the more constructive scenario alive, even if progress remains rather hesitant.
Ethereum: Lower Range Support Under Pressure
Ethereum has not managed to retain its 50-day moving average. Instead, it is heading towards the bottom of its range around 2,360, with the 50-day line at approximately 2,545 forming the upper boundary.
That lower support area is broadly comparable to Bitcoin returning to the vicinity of 75,000. In other words, Ethereum is already testing a weaker part of its own structure.
Another RSI failure below neutral 50 adds to the concern. A sustained move below 2,360 would open the possibility of a test of the 200-day moving average, around 2,147.
Gold and Crude Oil: Two Very Different Setups
Gold: A Quiet Market With a Negative Bias
Gold has been going nowhere for days, but the lack of movement is not necessarily reassuring. The more important development is the break beneath the rising trend line from June, around $4,110.
Below that line, there is a risk of a move under $4,000. The RSI has now produced a third failure below 50, while both the 50-day and 200-day moving averages are falling. That is a fairly comprehensive collection of negative signals.
The month-long lack of progress makes the bearish setup more believable rather than less. Gold needs to break $4,150 to shake off this negative scenario.
Crude Oil: Another Revival Keeps $108 to $109 in Play
Every time crude oil appears ready to cool off, it finds another reason to revive. Support has developed around $95, and the price is now holding near the top of the previous month’s gap, around $99.
While $95 holds, the chart points towards a possible move to $108 to $109. That may sound rather ambitious, but it is the projection supported by the current setup.
An RSI rebound from above neutral 50 adds to the positive picture. There is also scope to redraw the channel floor nearer the 50-day moving average at approximately $92, giving a lower reference point beneath the immediate $95 support.
Smaller-Cap Shares to Watch
- Arrow Exploration: Above 39p, Looking for 46p: Arrow Exploration is the standout mover in this selection. The upside objective was raised to 46p by the end of November after the shares pushed through the rising trend channel drawn from the same period a year earlier. The key breakout level is 39p. Above that, 46p remains the working target, with the possibility of reaching it sooner than the stated timeframe. The strength of the move suggests there could eventually be more available, but 46p is the defined objective rather than an invitation to invent a higher number.
- Coinsilium: A Golden Cross Approaches: The sector may not be quite as fashionable as it was the previous summer, but Coinsilium’s chart is looking constructive. Higher highs and higher lows are developing above rising 50-day and 200-day moving averages, with a golden cross approaching. The immediate condition is that the shares hold October support around 2.88p. Above that, the top of the range at 3.6p is the objective by the end of November. That looks like a minimum ambition within the bullish setup, given the latest gap higher and an RSI rebound from comfortably above neutral 50.
- Rentokil: A Bear-Trap Island Reversal: Rentokil has gapped higher after the two downward gaps seen in July. That creates a bear-trap island reversal, a pattern in which a previously weak section of trading becomes isolated by a subsequent gap back up. The 50-day moving average around 325p is the key reference. Above it, the target is the top of the falling trend channel near 377p by the end of November, or potentially sooner. The wider channel is still descending, so this is a recovery setup within that structure rather than a reason to ignore the remaining overhead resistance.
- Renalytix: The Saucer-Shaped Recovery Continues: Renalytix has been one of the stronger recent chart setups, helped by a distinctly bullish, saucer-shaped reversal. The latest feature is a bounce above a rising 50-day moving average. That is a particularly useful combination in this style of technical analysis. The average is rising, and the shares are finding support above it, suggesting the recovery still has the potential to produce a decent-sized move. While the shares remain above the 50-day line at approximately 5.25p, the objective is 7.6p by the end of November.
- Rockfire: Rising Towards a Golden Cross: Rockfire’s strong run began with its break through the 50-day moving average around the turn of the month. The shares subsequently reached the first target and the 200-day moving average near 0.14p. Above that area, the focus is a retest of approximately 0.20p, a level already reached earlier in the week. Both the 50-day and 200-day moving averages are now rising, with the shares advancing towards a golden cross. That approach to the crossover can be one of the strongest phases of the cycle, rather than merely a waiting period before the signal arrives.
- Touchstone: A Gap Higher Above 9.8p: Touchstone completes the selection with another bounce above a rising 50-day moving average. A gap higher has also produced a small bear-trap island reversal above recently broken resistance around 9.8p. The objective is the top of the range and the upper boundary of the channel drawn from the same period a year earlier, at approximately 12.5p by the end of November. An extended double bounce around RSI 50 adds support to the positive interpretation. The combination of the gap, the rising average and the momentum rebound makes this more than a single-signal setup.
This commentary is for information only and is not investment advice. Independently research and verify any information before relying on it, and seek professional financial advice where appropriate. Vox Markets is not regulated under UK financial services law.
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.
