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, Anglesey Mining, Arrow Exploration, Cykel AI, East Star, Gfinity, Huddled, Jadestone, Jangada, Medpal, Prospex, Richmond Hill, Talon Resources.
The main indices remain at an important technical point. Rising channels remain across several major markets, but support levels matter more than ever. If those levels give way on a closing basis, the picture changes quickly.
At the same time, Bitcoin is approaching a potentially significant moving-average event, gold has produced a useful bear-trap recovery, crude oil is pushing higher, and several UK smaller companies are showing the type of consolidation patterns that can lead to sharp moves.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100: Still Inside the Rising Channel
The FTSE 100 remains within the rising trend channel that has been in place since the end of March. The floor of that channel is currently near the rising 50-day moving average, around 10,712.
As long as the index remains above that area, the working assumption has to be that the channel continues to hold. Recent resistance sits around 10,900, although the broader channel top points towards the 11,000 area. In a normal market that might be a reasonable target for the end of next month, but these are not exactly normal conditions, particularly given the bond-market backdrop.
The level to respect on the downside is the 50-day line and channel floor. An end-of-day close back below that zone would favour a move towards early July support at 10,400. That would also bring the FTSE close to its 200-day moving average near 10,347.
For now, the path of least resistance remains within the rising channel, but the market needs to stay above 10,712 to preserve that constructive view.
DAX: Recovery Possible Above the 50-Day Average
The DAX has come back from what looks like a bull-trap move above 26,500. However, the pullback has found support above a rising 50-day moving average, currently around 25,600. That is encouraging for anyone looking for a recovery.
The relative strength index, or RSI, has slipped below the neutral 50 level, so there is reason to remain alert for another support test. The immediate possibilities are:
- Support at the 50-day moving average near 25,600.
- A deeper retreat towards the March channel floor around 25,200.
- A recovery through immediate resistance at 26,000.
The 26,000 area is important because it acted as a neckline during the middle of last month. A move back above it would improve the short-term tone considerably.
Dow: A Test of Trend Support
The Dow is in a rising trend channel from April, much like the FTSE, but it is sitting right on its 50-day moving average. The channel floor is near 52,700, making this a crucial support area.
A decisive breakdown below 52,700 would point towards 51,500, where post-June support comes into play. On the upside, the key hurdle is the red August resistance line at 53,600.
Only a break above 53,600 would put the market back into a properly bullish mode. That would reopen the prospect of a move towards the top of the channel and potentially 55,000 plus through the rest of September and into October.
Bitcoin: Golden Cross Approaching
Bitcoin remains in a relatively tight recent range, but the technical setup is becoming more interesting. The range base is around $76,000, while the top sits around $82,000.
A break above $82,000 would point towards the top of the broadening triangle that has been developing since February. That projection is as high as $93,000.
On any pullback, the preferred support level is the top of the previous gap near $72,500. Holding that area would keep the current consolidation looking like a pause within a broader upward move rather than the start of a bigger decline.
The major event on the chart is the prospective golden cross between the rising 50-day and 200-day moving averages. This is only days, perhaps a week or so, away. A golden cross is generally seen as a bullish longer-term technical signal, especially when both moving averages are rising. The strongest phase of a move often appears ahead of, or during, that crossover.
It would be disappointing not to see an upside move if Bitcoin is going to deliver one around this signal. For background on how this indicator is commonly used, see Investopedia’s explanation of the golden cross.
Ethereum: Consolidation in Midair
Ethereum is also consolidating, although the price action has the appearance of being suspended in midair between nearby support and resistance.
Recent support is around $2,350, while the range top is near $2,470. A break above $2,470 would open the way towards $2,900, the top of the rising trend channel from February.
If the market breaks down instead, the preferred destination would be May resistance on the way down at $2,170. Ideally, Ethereum remains on the right side of $2,300 and builds a proper platform for an upside break.
Gold: Bear Trap Recovery From Channel Support
Gold has bounced at the floor of its rising trend channel, around $4,360. It looked like an unlikely place for the market to turn, but that is exactly what has happened so far.
The more useful interpretation is that gold produced a bear trap. The price briefly slipped below the pre-breakout area from last month, moving under $4,310 and down towards $4,290, before snapping back higher. That type of move can flush out weak holders and late short positions before a recovery.
The hope now is straightforward: gold goes up, stays up and remains in the rising channel. It is a steep channel, but there is double support underneath the market:
- The floor of the rising price channel.
- The rising 50-day moving average, currently around 4,231.
If there is another dip, the 50-day line is the natural level where support should emerge. The RSI has also recovered above the neutral 50 level, adding to the improved tone. Initial resistance is near $4,530, even if the market pauses again after reaching that area.
WTI Crude Oil: Above $90 and Looking Higher
WTI crude oil has been pushing through $90 per barrel. The more important chart levels are recent July resistance around $93, followed by the psychologically significant $100 area.
A move towards $101 to $102 by the end of next month is possible if the rally retains momentum. For bulls, the ideal scenario is for oil to remain above the recently broken resistance level around $87.
That $87 area was previously a ceiling. Now it should become a floor. Unless the wider geopolitical situation is resolved, it looks as though $87 could be the lowest level seen in the near term.
UK Small-Cap Charts to Watch
The more interesting opportunities are often found in smaller stocks when the chart setup lines up with a clear moving-average structure, a breakout, or a period of tight consolidation near the lows.
- Anglesey Mining: Strong Moving-Average Support: Anglesey Mining appears to be finding a second wind. The shares are bouncing above both rising 50-day and 200-day moving averages, which is a strong leading indicator when it occurs after a period of basing. While the stock holds above the 200-day line at 5.4p, the chart points towards 9.66p by the end of next month.
- Arrow Exploration: A Gap Through Resistance: Arrow Exploration looks as though the market may finally be starting to rate it more highly. The stock gapped through previous resistance and has apparently nudged the 30p level. While it stays above the channel floor at 27p, the top of the range and rising channel points towards 36p by the end of next month.
- Andrada Mining: Holding Above 6p: Andrada has staged the sort of rally that might have been expected several years ago. The shares are now bouncing around the top of the old target at 6p. As long as the stock remains above recent support at about 5.6p, the upper parallel of the rising trend channel from December points towards 8p by the end of next month.
- Cykel AI: A Classic Low-Level Consolidation Setup: Cykel AI is not a chart that gets much attention, but the technical setup is worth noting. The shares have a rising 50-day moving average, along with an uptrend in the RSI window. Above the 50-day line at 17p, the upside target is as high as 31p, potentially by the end of next month. A sideways consolidation above a rising 50-day moving average near the low is one of the better technical setups available in a stock or market. It shows that selling pressure has faded while the underlying trend starts to improve. The question, as always, is whether the pattern actually follows through.
- East Star Resources: A Saucer Turnaround Building: East Star has already reached the initial target at 6.66p. Above that level, the top of the rising trend channel from last summer points towards 10p to 12p by the end of next month. The setup looks particularly constructive. There are strong blue candles on the chart and the beginnings of a bowl, or saucer, type turnaround. That is the opposite of the momentum pattern seen on the way down in 2021, with momentum now building on the right-hand side of the formation.
- Gfinity: A Brave Call Above the 50-Day Line: Gfinity has a setup similar to Cykel AI in one key respect: consolidation above a rising 50-day moving average near the lows. The expectation is for a break higher towards the top of the falling trend channel at 0.06p by the end of next month. It is a brave call, and the key condition is simple: the shares need to stay above the rising 50-day line at 0.036p.
- Huddled: Support Remains Firm: Huddled continues to find support at and above a rising 50-day moving average. Since breaking out, the stock has not even needed to retest that average, which is a positive sign. The immediate target is the top of the gap near 0.73p, potentially in the coming days. The preferred condition is for the shares to stay above recently broken resistance around 0.50p.
- Jadestone Energy: Channel Target at 47p: Jadestone Energy has backed off slightly, but the chart remains constructive while the shares hold above old resistance at 34p. Above that level, the top of the rising red trend channel points towards 47p by the end of next month.
- Jangada Mines: Watch for a Close Above 0.75p: Jangada Mines is attempting to break out from a falling wedge. The key technical trigger is an end-of-day close above 0.75p. If that happens, the next target is around 0.9p. The RSI uptrend offers some backing to the bullish case, although this remains a chart where patience is required. The sensible technical approach is to wait for the confirmed closing break rather than anticipate it.
- MedPal: Back Above the 200-Day Line: MedPal is one of the more interesting charts at the moment. The price channel top points towards 6p, initially expected by the end of this month. Given the momentum, that target may arrive earlier, particularly if a company sales update is close. The shares need to remain above recently broken resistance at 4.6p. More significantly, MedPal is properly back above its 200-day moving average for the first time since October.
- Prospex Energy: Golden Cross and an Ambitious Target: Prospex has delivered technically so far. The shares have produced a golden cross between the 50-day and 200-day moving averages, and the run-up into that event has been the strongest part of the cycle to date. The initial target is the top of the rising trend channel from October at 5.3p. Beyond that, there is a much more ambitious resistance-line projection from 2023 and 2024, pointing as high as 10p by October. It is not obvious what fundamental catalyst would be required to produce that kind of move, but the chart remains solid while the shares are above 4p.
- Richmond Hill: A Quiet Break Above the 50-Day Average: Richmond Hill is not the most dramatic mover, but it has broken above its 50-day moving average at 1.3p. Above that level, the top of the range and the falling trend channel point towards 1.85p by next month. It is a quieter chart, but the breakout is worth noting.
- Talon Resources: Potential Turning Point: Talon Resources has been heavily talked up without much reward so far. However, the chart may finally be beginning to cooperate. The shares have broken above the 50-day moving average for the first time in their recent history. While Talon stays above that line at 1.32p, the first target is the top of the range around 1.4p. If this is a genuine turning point, the stock could retrace between one-third and one-half of the large down bar seen in June. That would imply a move towards 1.8p to 1.9p by the end of next month. With drilling commencing at Eagle Lake, there is clearly company-specific interest too. But from a pure charting perspective, holding above the 50-day line is the essential requirement.
The Levels That Matter Most
The broad message is that trend support is doing a lot of work across the markets. The FTSE, Dow, gold and several of the smaller-company charts all depend on rising moving averages or rising channel floors holding firm.
For crypto, Bitcoin’s approaching golden cross is the standout event. For commodities, gold has recovered from a bear trap and WTI crude oil remains well placed while it is above $87. In UK small caps, the best-looking charts are those consolidating above a rising 50-day line, especially where there is also a reclaim of the 200-day moving average.
Technical analysis is about levels, probabilities and confirmation. A target is not a guarantee, and a good-looking setup still needs price action to validate it. The cleanest signals come when support holds, resistance breaks and the moving averages begin to point in the same direction.
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.
