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, CMC, Guardian Metal, Halo, KEFI, Sintana, S4, Sosander, Tinybuild, United Oil & Gas, Zephyr.
The broad tone across the charts is starting to improve. A few of the major indices are pressing against key resistance, crypto is trying to stabilise after bruising price action, and several small caps are setting up in ways that look much more constructive than they have for a while.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
There are still levels that need to break cleanly, and in a few cases, the market is very much at decision time. But overall, there are enough bullish technical signals to justify a more positive stance.
FTSE 100 looks ready to push higher
The FTSE 100 is shaping up better than it has done in recent sessions. The key positives are fairly straightforward.
- There have been multiple rebounds from the RSI 50 area.
- Price has moved sideways above a 50 day moving average that is now rising.
- The market is pressing up towards the top of its recent range.
The level to watch is around 10,620, which matches both the range ceiling and the top of the falling trend channel that has been in place since March. A daily close above that would be the confirmation that the market is ready for the next leg higher.
If that breakout comes through, the first target is around 10,700. Above that, the more important upside area is the old February resistance near 10,900.
For anyone taking the more aggressive approach, the assumption is simply that the market is already trying to rise from here. In that case, the main nearby risk point is the 50 day line at 10,386.
On the downside, even if there is a wobble, recent support around 10,330 should be the main line of defence.
DAX breakout setup remains strong
The DAX is also looking constructive. It has already worked through one resistance line, pulled back, and is now trying to clear what looks like the more decisive barrier from last month near 25,000.
If that break sticks, the chart points towards the top of the broader channel from March, which could carry the market as high as 26,300 by the end of next month.
There are a few reasons this setup looks healthy:
- The 50 day moving average is rising.
- The 200 day moving average is rising too.
- The RSI has held around the 50 area and bounced.
That combination usually supports the bullish case. If the move fails, the 50 day line around 24,600 is the likely downside limit for now.
Dow Jones is edging towards a breakout
The Dow is trying to force a move out of its near term channel. The immediate hurdle is around 52,900. A break through that level opens the door to the longer awaited November resistance line at roughly 53,900.
At the moment, it is still a case of getting through the first gate before thinking too much about the second. But the chart is leaning in the right direction.
If there is any sudden pullback, support on the right side of 51,000 would keep the current bullish structure intact.
Bitcoin is improving, but still needs to prove itself
Bitcoin always feels better when it is above 60,000, and that remains true here. The chart is showing signs of improvement, although it is not a done deal yet.
The main obstacle is the resistance line from May. If Bitcoin can break that, it would be a meaningful technical achievement and should allow a push towards 67,000, possibly even up to the 50 day moving average.
There are two ways to read the current setup:
- The market may still be vulnerable to another dip towards the rising support projection from April.
- Alternatively, the recent bounce may already be the reaction from support, meaning the low is in and the recovery is underway.
One of the more encouraging details is the bullish divergence. Price has edged to slightly lower lows, while the RSI has held steadier around the 30 zone. That often hints that downside momentum is fading.
For now, 67,000 is the obvious near term upside marker if the breakout follows through.
Ethereum is also starting to repair the damage
Ethereum is showing a similar improvement. The chart has produced a stronger RSI recovery after the earlier oversold slide, which suggests selling pressure is no longer as intense as it was.
As with Bitcoin, the possibility here is that the market is now working off a shallower rising support line. If that interpretation is right, the threat of another move below 1,500 starts to fade.
Instead, the recovery scenario would target:
- The 50 day moving average
- The old August resistance line near 1,860
That upside target comes into view by the end of next month, provided Ethereum can hold above 1,500 from here.
Gold may finally be finding traction
Gold has been a painful chart, but it is beginning to look less threatening. The market is trying to build from just above the 4,000 area, and that could be enough to keep the broader bullish case alive.
There is a possibility that the shallower support line is not the one that really matters, and that the original support zone closer to 3,900 is the more important long term base. Either way, the recent action has improved enough to allow for a rebound towards the late January to February resistance line around 4,290.
That target remains valid even if the market pulls back again afterwards.
Another positive is the bullish divergence that had already begun to show up. That is helping take some of the pressure out of the chart and, for now at least, reduces the risk of a much uglier breakdown below 3,900 towards the mid 3,000s.
Crude oil is at a make or break level
Crude oil has already done what the chart was looking for, namely testing the gap area around 68.00. That means the market is now at the point where it either rebounds from here or starts opening up a more bearish scenario.
The preferred outcome is a bounce from the 67 to 68 dollar zone back towards the 200 day moving average, which sits around 74.12.
If that rebound does not happen, the risk is that the gap fill ends up failing and the market rolls over towards the 60 dollar area.
Standout stock charts
CMC Markets: CMC has been exceptional since its recent update. The chart has already powered through earlier upside targets, including the move to around £6. With that strength continuing, the next target now looks as high as £8.20 by the end of next month. The move has been especially impressive this year, following last year’s consolidation. This is what a sustained technical breakout looks like when momentum really takes hold.
Guardian Metal: Guardian Metal continues to behave like a strong stock. It has bounced again above a rising 200 day moving average, which usually suggests that the broader uptrend is still in force. Once the current consolidation is out of the way, the chart implies an initial move towards 270p by the end of next month, as long as the shares hold above 200p.
Halo Minerals: Halo appears to be consolidating in a healthy way after breaking out of its falling trend channel. The breakout through 9.5p has improved the structure, but the key next signal would be a daily close above the 50 day moving average at 10.1p. If that comes through, the chart opens up towards 14p to 15p by the end of next month, with the top of a broadening triangle from late April acting as the main upside marker. The 200 day moving average is also sitting just above, giving another useful target zone. The important thing is that the shares stay above the recently broken resistance level.
KEFI Gold and Copper: KEFI has had plenty of noise around it, but the chart itself is staying relatively stable and still looks capable of moving higher. The immediate hurdle is the resistance line around 1.05p. A break above that would target the 50 day moving average at 1.2p. What stands out here is how little credit the market appears to be giving recent positive developments, including the $400 million mining contract. The chart suggests the news has not really been priced in.
Sintana Energy: Sintana had a decent update, and the chart is trying to respond. The key feature is bullish divergence, which could help the shares rebound from around 18p. The first recovery target is back towards 22p by the end of next month, with scope for a move a little higher to around 23p, which matches the lower edge of last month’s gap down.
S4 Capital: S4 is also beginning to look better. The shares have bounced from old resistance dating back to January around the 30p level, which has now turned into support. As long as that level holds, the initial upside target is the 50 day moving average near 39p. If momentum continues, a retest of the May resistance zone in the mid 40s becomes possible by the end of August.
Sosandar: Sosandar is one of the more interesting charts because it does not immediately strike people as a big momentum setup, yet technically it is shaping up very well. The first target is around 12p, but the price action is now strong enough to justify looking towards the upper parallel of the rising trend channel from December, which points to as much as 15p by the end of next month. This is a very positive setup, even if it may seem slightly counterintuitive at first glance.
TinyBuild: TinyBuild has been grinding higher in a fairly orderly way. The chart has broken out through 10p from what looks like a mid move consolidation. That pattern often acts as a continuation signal, and in this case it points towards the top of the rising channel from last year at around 14.5p by the end of next month, if not sooner.
United Oil & Gas: United Oil & Gas has been one of the more surprising gainers. After years of waiting for a proper move, the chart now looks as though it may finally be delivering. The near term target is the top of the channel around 0.27p. Beyond that, the broader destination looks to be 0.3p plus, following the upper trend line extending from late 2024. As long as the shares remain above the recently broken resistance at 0.20p, the bias stays positive.
Zephyr Energy: Zephyr is another stock emerging from a long quiet patch. The shares have broken out above a rising 50 day moving average, and both the 50 day and 200 day lines are climbing. That leaves the chart looking towards the top of the channel at around 4.7p by the end of next month. Anyone taking a more cautious stance might prefer to wait for a break above 3.8p first, but the chart already looks as though it is on its way, helped by the latest news about expanding its footprint.
The main takeaway
The dominant theme across this set of charts is that a lot of markets are sitting just below important breakout points, while several others are showing bullish divergence or holding above rising moving averages.
That does not mean everything is automatically headed straight up. In a number of cases, the next resistance break still needs to happen. But the balance of evidence is improving.
The FTSE 100, DAX and Dow all look capable of pushing on. Bitcoin and Ethereum are trying to stabilise. Gold is less threatening than it was. Crude oil is at a critical support test. And among the stocks, there are some very strong looking continuation and recovery setups, especially in CMC, Guardian Metal, Sosandar, TinyBuild, United Oil & Gas and Zephyr.
For now, this is a market environment where the charts are starting to lean bullish again, provided the key support levels continue to hold and the breakout levels begin to give way.
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.
