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, African Pioneer, CloudCoco, Churchill China, eEnergy, Georgina, Halo, Itaconix, Mila, Ocado, Rolls Royce.
The FTSE 100 has done rather better, and rather more quickly, than expected. Elsewhere, the DAX is attempting to play catch-up, the Dow is absorbing the Fed reaction, and cryptocurrencies are showing signs of life after a distinctly dull spell.
On the individual-share side, there are some notable technical setups across small caps and larger names alike. Here is the charting picture, including the key support, resistance and upside targets to watch.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100: New Highs Arriving Earlier Than Expected
The FTSE 100 has reached fresh highs sooner than anticipated. The original expectation was for a move towards 11,000, or just above, at the top of the rising trend channel running from March.
The index is now heading towards 11,100, with 11,000 originally pencilled in for the end of next month. It may well get there before the end of this month instead.
The important technical level is the former late-February intraday peak at 10,935. As long as the market can remain above that level on an end-of-day closing basis, the outlook remains for 11,000-plus in the coming days.
- Key support: 10,935 on a closing basis
- Potential pullback level: 10,760, which was recent resistance
- Upside objective: 11,000 and above
- RSI: 71, technically overbought, but not in the painful way seen during February
A pullback would not be a surprise after such a strong run, but the index remains in good shape while it holds above the old breakout area.
DAX: Trying to Play Catch-Up
The DAX has printed a strange collection of red candles this week, but the market has continued to hold its ground near the top of Monday’s gap. That key level is around 25,300.
Above 25,300 on an end-of-day close, the target is 26,300 by the end of next month. That would bring the index to the top of the rising trend channel from March.
If there is a rug pull, the obvious downside level is 25,000. That is both the floor of the channel and the area of the 50-day moving average, making it a significant support zone.
- Breakout trigger: 25,300
- Upside target: 26,300
- Channel and 50-day support: 25,000
- RSI: Around 58, which is in a constructive position for further gains
Dow Jones: The Fed Rug Pull May Be Fading
The Dow was the bogeyman after the latest Federal Reserve news, or lack of it. There was a sharp pullback towards the 50-day moving average at 51,500, but the market managed to stay on the right side of that moving average by the close. It also held the floor of the rising trend channel from April.
The RSI position is a little unclear. There is a potential breakdown around the 50 level, although it may be more accurate to place that line closer to 46 or 47. Either way, the immediate reaction to Fed news can often be misleading. A negative first response is frequently followed by a bounce during the next session, and that appears to be what is happening here.
A break through 52,700 would point towards 54,000 by the end of next month. If the market cannot hold up, then 50,000 may come back into view. At the moment, though, the Dow looks too strong for such a deep retracement, particularly given the way it is absorbing the oil-market situation.
- 50-day moving average: 51,500
- Breakout level: 52,700
- Upside target: 54,000
- Deeper downside scenario: 50,000
Bitcoin: A Bounce Around the Rising 50-Day Average
Cryptocurrencies have been as dull as dishwater recently, but Bitcoin is beginning to show something more encouraging. The price is bouncing at, and slightly below, a rising 50-day moving average. That is a bullish signal.
While Bitcoin remains above the 50-day line around 63,400, a move towards 68,000 looks realistic. That is the resistance line dating back to October. The best-case scenario is a push towards 71,500 and the 200-day moving average by the end of next month.
- 50-day moving average support: 63,400
- First upside target: 68,000
- Best-case target: 71,500 and the 200-day moving average
- Rug-pull support: 61,000, the early-July support area
Ethereum: Looking Stronger Than Bitcoin
Ethereum has arguably been the better chart of the two major cryptocurrencies. It has found support well above a rising 50-day moving average, which is a stronger technical position than simply bouncing on the line itself.
The minimum upside target is the 200-day moving average at 2,116. The RSI has been rebounding in the 50s, another positive sign. As long as Ethereum stays above 1,850, the focus remains on the 200-day average, a level that has not been seriously approached since November.
If there is a breakdown, the 50-day moving average at 1,769 becomes the main support level to monitor.
- Key support: 1,850
- Upside objective: 2,116 at the 200-day moving average
- Secondary support: 1,769 at the 50-day moving average
Gold: Still Stuck in a Range
Gold remains a messy chart, but it is basically range-bound. The working range is between 4,000 and the 50-day moving average at 4,192.
There is little reason to expect fireworks while the price remains trapped within those boundaries. A break above the 4,200 zone, however, could restart the major rally that ended in late February.
On the downside, 3,900 is the post-October support level. That only comes into play if gold breaks beneath 4,000. A recovery in the RSI above the neutral 50 level over the next week or two would also help negate that bearish possibility.
- Range floor: 4,000
- 50-day moving average: 4,192
- Breakout zone: 4,200
- Bearish support: 3,900
WTI Crude Oil: A Gap Still Needs Filling
Crude oil remains slightly messy because there is an unfilled gap up towards $87. So far, the best move has only been towards the $83.20 area.
While oil remains below the floor of the gap at $85, there is a risk of a near-term test of the 200-day moving average at $75.96. The RSI is constructive at 54, which is above the neutral 50 level, but the most likely near-term scenario is a range between the 50-day moving average and the gap near $87.
That assumes, of course, that geopolitics permits a relatively orderly market.
- Gap-floor resistance: $85
- Gap target: $87
- Potential downside test: $75.96 at the 200-day moving average
- RSI: 54, mildly positive
Small-Cap Charts:
- African Pioneer: Breakout Above 1.6p: African Pioneer was the standout stock of the day by some distance. The shares broke above both the top of the channel and the top of the trading range at 1.6p. Above 1.6p, the next target is 2.4p, which was a resistance area on the way down during 2024. The company also issued a decent update on financing and a mine development agreement, which is normally the sort of news that supports a technical breakout.
- CloudCoco: Above the 200-Day Moving Average: CloudCoco may have a silly name, but the chart is beginning to look more serious. The shares have broken through the 200-day moving average at 0.17p. The recent candles have opened near their lows and closed near their highs, which suggests accumulation. Above the 200-day line, the target is 0.22p, the resistance level from June on the way down. Ideally, the shares should remain above 0.16p, which has been recent support.
- Churchill China: A Possible Golden Cross: Churchill China has broken above both its 50-day and 200-day moving averages after a sideways shuffle. The two moving averages are now threatening to form a golden cross, which would add further weight to the recovery case. Above recent support around 390p, the target is 500p by the end of next month. The exact catalyst is not obvious, but the chart is certainly becoming more encouraging.
- Contango: A Difficult Customer Trying to Regroup: Contango has been a dog for a long time, particularly for bullish investors. After what may have been the final breakdown during May and June, the shares are now attempting to regroup. The 50-day moving average sits at 0.54p. Above that, the chart points towards a resistance line from last summer, potentially taking the shares to 0.94p by the end of September. This remains a difficult stock, and fundraisings or similar events could easily spoil the setup. The technical picture is improving, but it still needs treating with the usual degree of caution.
- eEnergy: W-Shaped Turnaround Above 3p: eEnergy is forming a W-shaped turnaround pattern. Above 3p, the first target is the 50-day moving average at 3.75p. The best-case scenario is a move to the floor of the gap at 4.25p by the end of next month. The crucial point is that the shares need to stay above the 3p zone for the recovery pattern to remain intact.
- Georgina Energy: 10p Is the Key Level: Georgina Energy is hopefully on its way. The first target is 10p after the shares broke through 6p at the turn of the week. An end-of-day close above 10p could take the shares towards 14p-plus by the end of next month. The stock has often been clobbered by bears, but it looks as though they may finally have lost this one, especially while the price remains above 8p, the May resistance level.
- Halo: Rising 50-Day Support Remains Constructive: Halo issued a decent announcement and is bouncing modestly above a rising 50-day moving average at 9.58p. It has not actually touched that moving average, which underlines the strength of the underlying support. As long as the shares hold above the 50-day line, the target is the top of the channel at 12p by the end of next month. Any dips to the 50-day average can be regarded as buying opportunities. For a more cautious approach, wait for the RSI to rise above the neutral 50 level. It is currently around 46.
- Itaconix: Bull Flag Breakout Points to 192p: Itaconix has been another charting winner and is breaking out of a V-shaped bull flag. The third target was 170p, and above that the focus shifts to 192p. That 192p level could be reached in the coming days. There may be further levels beyond it, but 192p would be a perfectly satisfactory outcome, particularly following the latest golden cross.
- Mondi: Gap Through the 200-Day Average: Mondi is not normally one of the larger shares under consideration, but the chart deserves attention after a gap through the 200-day moving average. That is normally a strong signal. Above the old April resistance at 885p, the shares are targeting the top of the triangle at 1,040p by the end of next month. The chart also has the hallmarks of a bear-trap island reversal. The shares gapped down in April and have now gapped up, creating a powerful reversal pattern. Add the prospect of a golden cross and two RSI rebounds above 50 before the latest push higher, and the technical case is notably strong.
- Mila: Bouncing Along the Base of Its Channel: Mila has its fans and is currently bouncing around the bottom of a rising trend channel that began around this time last year. The floor of that channel is around 1p. Above that, the target is the 200-day moving average at 1.5p, potentially by the end of next month. It is a punchy call, but perhaps it is time for Mila to have another go to the upside.
- Ocado: V-Shaped Bull Flag After the July Rug Pull: Ocado has produced an impressive technical recovery after the sudden rug pull on 16 July, when the shares dipped towards 150p. That move appears to have shaken out the weak hands. The shares are now moving through a V-shaped bull flag breakout. An end-of-day close above 204p would point towards the top of the range near 250p, perhaps as soon as the end of next month. The rising 50-day moving average is a strong positive signal, as is the double RSI rebound from the 50 level, a pattern also seen in Mondi.
- Rolls-Royce: Repeated Support From the 50-Day Average: Rolls-Royce is another larger-name chart that looks strong. The shares have repeatedly bounced above a rising 50-day moving average, which is one of the clearer bullish signals available. A breakout through 1,470p would open the way to the top of the channel at 1,660p, potentially by the end of September. This one may need a little more time to deliver, but the structure remains firmly constructive.
Key Takeaway
The broad market picture remains constructive. The FTSE 100 is pressing towards 11,000, the DAX has room to catch up, and the Dow looks to be recovering from its initial Fed-related wobble. Bitcoin and Ethereum are also showing early signs of a more positive phase, while gold and oil remain range trades until their key boundaries give way.
For individual shares, the emphasis is on clean breakouts, rising 50-day moving averages, 200-day moving-average recoveries and RSI rebounds through neutral. As always, the key is not merely the target but whether the relevant breakout and support levels hold on an end-of-day closing basis.
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.
