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, Altona, Acuity, Amigo, ITM, Iomart, Iofina, Mila, and Tullow.
There is still plenty of noise in the market, but the charts are beginning to offer a few cleaner setups. Some major indices look as though they are stabilising, crypto remains split between recovery and relapse, gold is attempting to hold a bear-trap rebound, and crude oil is still the market everyone is focused on.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
On the stock side, several UK small caps are continuing to build positive technical patterns, with a handful already pushing into fresh legs higher.
FTSE 100: trying to find the floor of the channel
The FTSE is still in the process of identifying where the lower boundary of its channel actually sits. That floor had previously been marked a little higher, around the 10,360 area, but there is a reasonable argument for shifting it lower. If that adjusted trendline is the right one, it would imply the market may already be close to the low of the current move.
For now, the hope is that yesterday’s low at 10,188 was the key low. It is not a perfect support area, and it does sit in something of a no man’s land, but the trendline running from September could still be the feature that holds the market together.
The initial upside target is 10,416. If the FTSE can deliver an end-of-day close above that level, the next area to watch becomes the resistance line from the beginning of March, which points towards 10,600.
On the downside, there are still two obvious fallback levels:
- 10,080, which acted as support back in March
- The 200-day moving average, down near 9,800
At this stage, though, the working assumption is that the FTSE may already have put in its low for the swing.
DAX: a bear trap rebound with 24,600 still in sight
The DAX has produced what looks like a classic bear trap rebound. The market dipped below the 50-day moving average at 23,857, bounced off the gap support around 23,700, and that setup has worked rather neatly.
One encouraging detail here is that the RSI remains above the neutral 50 level. That is a constructive sign, particularly in an environment where oil prices have been surging. In other words, the index is still showing resilience rather than outright risk-off panic.
The most likely upside destination remains the April resistance zone through 24,600.
The key warning sign would be an end-of-day close back below 23,700. If that happens, the market would likely be pulled into filling the next gap lower, which would open the way to around 23,400.
Dow: still range-bound, but the bias is up
The Dow remains basically sideways, continuing to bounce off the mid-month gap support around 48,700. While that support holds, the upper end of the range near 50,000 remains the obvious magnet.
It still feels a little strange to be looking higher in this sort of backdrop, but the chart is still leaning that way.
On a best-case scenario, the November resistance line projection points towards 52,000 by the end of next month.
The main defensive level on the downside is the 50-day moving average at 47,800. Ideally, that should cap any deeper weakness if the current sideways pattern is simply a pause before another move up.
Bitcoin: still trying to decide if this is a recovery or something bigger
Bitcoin remains slightly puzzling. The central question is whether this is just a rally inside a broader bear market, or the early stage of a fresh bull run.
At the moment, price has failed at the top of the channel. If you are bearish, you will be looking at that and thinking this could be the beginning of another pullback similar to the sort of move seen at the end of January or the end of October.
The initial support level is the 50-day moving average at 72,200. As long as Bitcoin stays above that area, and with the RSI still above the neutral 50 line, the chart is still more glass half full than half empty.
That means there is still another chance of a break through 80,000, which would then target the 200-day moving average near 84,200.
Ethereum: looking a bit more fragile
Ethereum is in a less bullish position than Bitcoin. It has stalled at the top of a falling trend channel, which is not what you want to see if you are expecting immediate upside follow-through.
Initial support comes from the 50-day moving average at 2,203. If that gives way, then attention turns to the February uptrend line, which comes in around 2,017.
Momentum has also softened. The RSI has dropped below both the uptrend line from February and the neutral 50 level, so the setup is looking a bit more ropey than it did previously.
Still, if Ethereum can hold above the 50-day line, the best-case recovery target remains around 2,500, near the top of the recovery channel.
Gold: bear trap rebound, but still work to do
Gold had looked as though 4,600 might be the floor on the latest move, but the actual low so far has come in at 4,510.
What matters now is that the market appears to have staged a bear trap from below the initial April support level at 4,545. If that rebound continues, the next target is the top of the falling trend channel from late January, which points towards 4,740.
There is still overhead resistance from the 50-day moving average at 4,842, so this is not a completely open road higher. But the chart has improved from the lows.
WTI crude oil: still the market of the moment
Crude remains the market everyone is talking about. The original call had been for a move towards 105, but price has already extended much further, reaching nearly 110 to 111.
The key level now is the old resistance, more accurately around 106. While WTI remains above that area, there is scope for one final spike as high as 120.
If the market slips back below 106, then the old resistance around 98 becomes the next major level to monitor.
The chart is beginning to look a little tired, but with oil more than most markets, everything depends on what is happening on the ground. The technicals matter, but the headlines are clearly capable of accelerating or derailing the move very quickly.
Small-cap stock charts to watch
Altona Rare Earths: one of the stronger names this year: Altona has been one of the better performers so far this year, with the shares roughly 2.5 times higher. The chart suggests a fresh leg to the upside may be starting. While the stock holds above recent support at 3.75p, there is potential for a move as high as 6p by the end of next month.
Acuity RM Group: a base that finally looks useful: Acuity appears to be coming back to life after a long period of doing very little. The important technical event here was the close well above the 200-day moving average at 0.93p. That has turned the chart into more of a basing situation, with scope for a move towards 1.22p, at the top of the rising trend channel, as long as price stays above the 200-day line.
Amigo Resources: another turnaround chart: Amigo is another stock that looks as though it has turned around. The key feature is the break above the resistance line from January, around 2.75p. If that breakout sticks, the next target becomes the top of the channel, which points as high as 5p by the end of June. The near-term hurdle is recent resistance around 3.1p. Clear that, and the setup starts looking especially strong.
ITM Power: consolidation points to another leg higher: ITM Power has been one of the standout charts over the last month. After consolidating in the 120p to 145p area, the shares look ready to move again. A break above 146p, which has been recent intraday resistance, would signal the next leg up, with a target towards 200p by the end of next month. The backdrop around energy transition themes and institutional support has helped keep this one technically strong.
Iomart Group: a very tidy turnaround: Iomart has already met the falling trend channel target at 23p. If it can now hold above that level, which also corresponds with old January resistance, the next objective becomes 30p by the end of next month. This is a very neat reversal setup, and one that still looks as though it has room to run.
Iofina: strong results, but the chart was already improving: Iofina is an interesting one because the chart had already started working well before the latest strong results. The stock had been called higher towards 40p from below 30p, and that target still looks achievable in the near term. If the momentum keeps building, a higher technical objective starts to emerge around 46p. That looks like a reasonable target for the summer.
Mila Resources: golden cross setup gaining momentum: Mila Resources is shaping up well. Both the 15-day and 200-day moving averages are rising, and the stock has broken above the old gap top around 1.5p. The run-up to a golden cross is often one of the stronger parts of a cycle, and that is a big part of the appeal here. Add in the fact that the shares gapped through resistance at the start of the week, and it becomes an even more impressive setup. The target from here is the top of the range at 2.6p by the end of next month.
Tullow: breaking through resistance: Tullow has gapped through resistance and already reached the resistance line target around 15.22p. Above that, the next level up points to roughly 16p, with a broader upside target of 17p by the end of next month. This can be a slow mover at times, but the chart remains positive while the shares stay above 13.75p, which marks the gap floor low.
What matters most right now
The broad message across the charts is that markets are still trying to stabilise rather than collapse. The FTSE and DAX are attempting to hold key technical supports. The Dow remains in a range but with upside bias. Bitcoin still has a chance to push higher if support holds, while Ethereum is more vulnerable. Gold has improved after a false break lower, and oil remains powerful but stretched.
Among individual shares, the best-looking setups are the ones that are either breaking out from prolonged consolidations or confirming turnarounds above old resistance and key moving averages. Those tend to be the names worth keeping nearest the top of the list.
For now, it is still a market where levels matter. If support zones continue to hold, there is scope for further upside across several of these charts. If they fail, the downside levels are already clearly mapped out.
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.
