Zak Mir takes a charting look at some of the most closely followed small caps on the London Stock Exchange. Today’s charts are for the FTSE 100, DAX, Dow, Bitcoin, Ethereum, Gold, WTI Crude Oil, Autins, African Pioneer, Character Group, Critical Minerals, Great Western, Headlam, Kendrick, Mycelx, Premier African, Strategic Minerals, Tungsten West, Union Jack Oil.
It is one of those markets where the charts are giving mixed messages, but not in a random way. The big split at the moment is fairly clear. European indices look vulnerable, the US still looks remarkably resilient, crypto is at a key decision point, gold is struggling around moving average resistance, and crude oil continues to look like the one market with proper momentum behind it.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
On the stock side, there are a number of small caps setting up well, especially where rising 50-day and 200-day moving averages are starting to align. That tends to be the strongest part of the cycle, and there are a few charts here that look as though they may still have another leg higher in them.
FTSE 100: clinging on, but looking vulnerable
The FTSE 100 remains pressed against the floor of its rising trend channel from October, but the top of that channel now looks lower than before. Rather than stretching up towards 11,000 plus, the near-term upper boundary has been adjusted to around 10,870.
That matters because the market is no longer shaping up like a clean run to fresh highs. Instead, it is behaving like a market trying to hold support while momentum quietly fades.
The key problem is the sharply falling 50-day moving average. There has been a two-day bull trap through that line, creating the impression that the FTSE might stabilise around the floor of the channel near 10,180. The concern is that this could be one of those setups where price hangs around support just long enough to convince people a bounce is coming, then drops hard.
The RSI in the low 40s adds to that bearish case. If the floor gives way, the first downside target is the March support area near 10,080. Below that, the 200-day moving average at 9,859 starts to look like a magnet.
The bearish scenario is delayed only if the index can produce an end-of-day close back above the 50-day moving average at 10,357.
DAX: sitting right on the line
The DAX has already done what many feared it might have to do, namely retreat to the 200-day moving average around 24,100. From here, the next support beneath that is the 50-day moving average at 23,758.
As long as the market remains below yesterday’s support around 24,200, that lower retest remains very much in play. At the same time, the RSI is hovering around 50, and price is trying to reclaim the 200-day line, so this is a market right on the balance point.
Whether the DAX closes decisively above or below current levels should tell the story. If it can recover properly, the upside target is around 24,800. If not, the risk remains that it slips further. Even the uptrend line from March is now debatable, which tells you how fine the margins are here.
Dow Jones: US strength still stands out
The Dow is the outlier among the major indices. While Europe has been wobbling, the US market has held up very firmly indeed. That is especially striking given the surge in oil, which you might have expected to unsettle equities more than it has.
The key support level is 49,400, and at the moment that looks solid. With the RSI around 60, the bias remains to the upside while that level holds. In that case, the next move could be towards 52,000 plus.
On the downside, the lower end of the current range comes in near 48,700. Below that, if there were a proper rug pull, the obvious destination would be the 50-day moving average at 47,890.
Importantly, both the 50-day and 200-day moving averages are still rising. That is a strong signal in itself, effectively the sort of positive alignment associated with a golden cross backdrop.
Bitcoin: repeated failure at the 200-day line
Bitcoin has kept everyone guessing. The question is whether the rally since February has run out of road, or whether this is merely a pause before a more bullish phase. Right now, the market is leaning towards caution.
Price has failed to break the 200-day moving average at 82,400 on three sessions in a row, arguably four. That makes the 200-day line the obvious point for bears to lean against.
If that resistance continues to cap the market, the first downside target is 79,000, and then potentially the 50-day moving average near 74,000. That creates a reasonably interesting risk-reward setup for anyone looking at the short side.
If, on the other hand, Bitcoin can push cleanly through the 200-day line, then the market opens up towards 91,000.
Ethereum: looking weaker than Bitcoin
Ethereum has never looked quite as bullish on the recovery as Bitcoin, and that relative weakness may be the more important signal here.
The market failed below 2,400 and is now sliding back towards the 50-day moving average at 2,243. Beneath that sits the floor of the channel around 2,100, which is now the obvious downside target unless Ethereum can reclaim 2,400 quickly.
The RSI has also broken its uptrend and slipped back under the neutral 50 mark, currently around 47.9. That loss of momentum reinforces the weaker setup.
So the near-term stance is fairly simple:
- Below 2,400: risk points down towards 2,100
- Back above 2,400: opens the way to 2,540 and potentially the top of the channel
Gold: 50-day resistance still the hurdle
Gold has been awkward recently, and the chart remains difficult. The market has repeatedly found resistance at the 50-day moving average. It did manage to poke above that line intraday, but then fell back, which is not what you want to see if you are looking for a clean upside breakout.
For now, it looks as though the rally into the 50-day line may have been a sell signal rather than a breakout. That echoes the hesitation seen in Bitcoin.
The first support level is 4,540, which also aligns with the uptrend line from October. Beneath that sits the bigger bearish target at the 200-day moving average around 4,324.
The only thing that improves the picture materially is an end-of-day close back above the 50-day line. If that happens, the top of the falling trend channel near 4,950 comes back into play fairly quickly.
WTI crude oil: still the strongest chart on the board
Crude oil remains the market with the cleanest momentum. Price has broken back above $99, and above that the next target looks like $110. There is not much in between that really matters on the chart.
The RSI has rebounded from just below the neutral 50 zone, and the 50-day moving average is rising sharply. That combination has kept the trend intact. It never really looked likely that oil would break and hold below that 50-day line, and so far it has not.
If there is a reversal, the current lower bound still looks relatively contained. The floor of the rising trend channel from January comes in near $94.
With RSI around 54, the chart remains in a healthy place for further upside.
Small-cap stock charts to watch
Autins Group: breakout through 13p: Autins is one of those names that tends to be under the radar, but the chart has improved significantly. The shares have broken out through the 12 to 13 pence resistance zone, and above that the next target is 20p, potentially by the end of next month. What strengthens the setup is the way the 50-day and 200-day moving averages are both rising, or heading into a golden cross style alignment. That is often where the strongest part of the move begins. After the breakout, the preference is for the shares to hold above the 200-day moving average around 9.5p.
African Pioneer: bounce from the floor of the channel: African Pioneer has bounced from the floor of its rising trend channel around 0.87p. From there, the chart points towards the top of the range at around 1.66p, possibly by the end of July and perhaps sooner. The ideal near-term condition is that the shares continue to hold above the 50-day moving average near 0.95p.
Character Group: strong recovery after a decent announcement: Character Group has produced one of the better looking turnarounds on the list. After a strong announcement, the shares gapped through the 200-day moving average at 263p. Above that, the target becomes 310p, which is the top of the rising trend channel from October and could be reached by the end of next month. As long as the shares stay above 263p on an end-of-day close basis, the chart looks constructive.
Critical Metals: lagging peers, but starting to improve: Given how well critical metals names have been trading more broadly, it is slightly surprising that Critical Metals has not moved more decisively already. Still, the setup is improving. The shares are pushing through the rising 200-day moving average around 9 to 12p, and the top of the rising trend channel sits near 15p. That is now the target for the next four to six weeks, provided the stock can stay above the 200-day line.
Great Western Mining: still heading in the right direction: Great Western Mining continues to look lively. The initial target had been around 5.5p by the end of this month, but the latest action suggests the shares may be capable of more than that. The next target above comes in at 6.4p, based on a September resistance line projection into the end of next month. Ideally, the stock should now remain above 4p. That would keep the structure intact.
Headlam: waiting for the trigger above 53p: Headlam is having another attempt at breaking through the 200-day moving average at 50p. If that gives way properly, the chart still points towards 67 to 68p, which is the top of the broadening triangle in place since September. The setup is helped by a bull flag sitting above a rising 50-day line. The key trigger is an end-of-day close above the top of that flag at 53p.
Kendrick Resources: exciting, but due some consolidation: Kendrick has been one of the standout performers of the year, perhaps the stock of the year so far. The latest burst of excitement pushed the shares up to 8p, matching the upper resistance projection from January. At this stage, the chart would ideally hold above the previous target of 5.22p. If the shares can manage an end-of-day close above 8p, then a best-case target of 12p becomes possible by the end of next month or into July. For the immediate term though, some consolidation would be no surprise unless 8p is cracked quickly.
Mycelx: a very strong step-progression chart: MyCelx may not win any prizes for the company name, but the chart is one of the more attractive ones around. It has been forming a classic step progression to the upside, which is one of the strongest patterns you can get: vertical move, consolidation, vertical move, and so on. The top of the long-term channel from this time last year sits at 82p, and that is the target for the end of next month if the current setup holds. A positive company announcement has helped, specifically a new Gulf of Mexico lease award with a supermajor. For chart purposes, the important thing is that the price remains above the 50-day moving average and the floor of the channel near 45p.
Novacyt: volatile, but 80p to £1 is the key zone: Novacyt remains a difficult chart because it behaves more like a pinball than a steady trend, with a broad range between 40p and 80p. The key point has been that old resistance around 53p mattered, and that held up as an important pivot. The next major resistance is 80p to £1, which is effectively where the shares peaked on the day. The setup is straightforward enough from here: Failure at 80p: some may prefer to wait for a retreat towards 53p again. It is not exactly a stock for widows and orphans, and recent volatility has underlined that.
Premier African Minerals: above the 50-day line, with upside if funding noise stays quiet: Premier African is one of those names people often avoid, but the chart has improved. The shares are now reasonably comfortable above a rising 50-day moving average at 0.18p. If the company avoids getting in the way of the chart with another fundraising, the shares could head towards 0.32p, potentially by the end of this month. The obvious hope for existing holders is that any capital raise, if it comes, is delayed long enough to allow more upside first.
Strategic Minerals: buying the dip worked: Strategic Minerals had a burst of interest late last week, and the price action hinted something was brewing. The shares were down intraday, then bounced sharply, and a significant update followed soon after. Technically, the useful point here is that buying the dip to the 50-day moving average worked well. There is now potential new support at old resistance around 5.75p. Above that, the next target is 8p by the end of next month.
Tungsten West: rising nicely above 35p support: Tungsten West is another chart in a similar area of the market that is behaving well. The shares are rising above a rising 50-day moving average at 35p, and the top of the channel points towards 47p. That target could be reached by the end of this month, or failing that, by the end of next month.
Union Jack Oil: gap through the 200-day line: Union Jack Oil is benefiting from the stronger oil backdrop. The shares have gapped through the 200-day moving average, which is exactly the kind of move that often resets sentiment. The second target on the chart is 5.5p. Beyond that, those with a more bullish stance may look towards 6.8p by the end of next month. The condition for that upside is that the stock stays above the previous target and now support level at 4.3p.
The bigger picture
The overall picture remains divided.
- FTSE 100 and DAX: vulnerable, with support being tested and momentum fading
- Dow Jones: still firm, with rising moving averages underpinning the trend
- Bitcoin and Ethereum: at important resistance and beginning to wobble
- Gold: struggling to get clear of the 50-day moving average
- WTI crude oil: still the cleanest bullish trend
On the small-cap front, the strongest setups remain the ones where price is breaking out above old resistance while the 50-day and 200-day averages are rising underneath. That combination continues to be the best technical backdrop around.
For now, the message from the charts is not to treat every market the same. Some are hanging on. Some are breaking higher. Some are close to rolling over. And in this sort of environment, the difference between a clean trend and a bull trap matters more than ever.
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.
