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, Ajax, Audioboom, Blackbird, Berkeley Energia, Blencowe, Coinsilium, Cykel, Microsalt, Reveille, Roundhouse, Rockfire.
The encouraging feature across this chart rundown is how often the same bullish combination appears: prices rising above a rising 50-day moving average, rebounds around the neutral 50 level on the relative strength index, and resistance lines finally giving way.
That does not mean everything is suddenly clear sailing. Ethereum still needs to reclaim its 50-day line, gold has yet to recover neutral momentum, and crude oil is running into resistance sooner than hoped. But several indices and individual shares are showing the sort of technical improvement that deserves attention.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
Stock Market Indices: Breakouts Begin to Take Shape
FTSE 100: Bullish Divergence Delivers
The FTSE 100 has done what we wanted following its bullish divergence. The slightly lower price low on October 8 was followed by a bear-trap rebound, with the index recovering above recently broken resistance at 10,615.
Bullish divergence occurs when price makes a lower low while momentum does not confirm that weakness. Here, it provided a useful warning that the selling pressure might be running out of steam.
The next task is to sustain a break of the 50-day moving average at 10,733. That would leave a move towards the record-high zone in play, even if such optimism ahead of the Budget feels a little ambitious. Perhaps we get a nice Budget.
The 50-day average is also beginning to rise, while the RSI has recovered to around 56, above its neutral midpoint. The essential condition is that the index remains above roughly 10,600 to maintain the upside case.
DAX: September Resistance Gives Way
The DAX has broken its September resistance line at approximately 25,400. An end-of-day close above that level would put the 50-day moving average at 25,769 in focus. After that, we can reassess rather than get ahead of ourselves.
There are two helpful supporting signals. The RSI has pushed back above 50, and the index has produced a double bounce from its rising 200-day moving average around 24,800. That gives the recovery a more convincing foundation than a resistance break alone.
Dow: The 50-Day Average Is Next
The Dow has also broken a resistance line from the previous month. The level that needed to go was 51,400, and that hurdle has been cleared.
The next objective is the 50-day moving average at 52,620, ideally later in the week. The best-case extension is towards 54,000, at the top of the trend channel drawn from April.
Bitcoin and Ethereum: Two Different Recovery Tests
Bitcoin: Holding the August Advance
Bitcoin has generally behaved itself, retaining the substantial move established in August. The immediate question is whether support can continue to form at or above the 50-day moving average. So far, holding above it is a positive.
While Bitcoin remains above the former resistance level at 82,000, the initial objective is at least 87,000, the previous month’s peak. The best-case target by the end of October is 96,000, at the top of the rising trend channel running from February.
The momentum picture also looks constructive. There has been a double bounce near RSI 50, alongside support from an RSI uptrend line dating back to June. Price is not doing all the work on its own: momentum is helping the bullish case.
Ethereum: Reclaiming 2,551 Is the Priority
Ethereum is less convincing. Falling below its 50-day moving average was disappointing, and that line now appears to be resistance at 2,551.
An end-of-day close above that level would reopen the prospect of 2,800 in the following days. Until then, it remains a recovery that needs confirmation.
The level we do not want to lose is the post-August support around 2,370. For a more cautious approach, the useful combination would be a close above the 50-day average and a recovery above RSI 50. At around 43, the RSI has not yet delivered that second signal.
Gold and WTI Crude Oil: Recoveries With Reservations
Gold: Regrouping, but Momentum Still Lags
Gold has been something of a problem child recently, although it is still trying to regroup. It is above the resistance line drawn from August, around 4,140. Holding above that line keeps the 50-day moving average near 4,340 in view.
The reservation is the RSI, which remains just below 45. With momentum still under its neutral midpoint, another test of the channel floor around 4,136, or broadly the 4,100 area, cannot be ruled out.
Above that support zone, the working upside objective remains 4,300-plus. It is a recovery attempt, but not yet one with all the momentum boxes ticked.
WTI Crude Oil: A Breather Rather Than the End of the Line?
WTI crude oil presents a mixed picture. Resistance is appearing around 94, rather than the 97 level previously targeted at the lower edge of the gap.
If the market stalls at 94, another test of the 50-day moving average at 89.75 could follow. The RSI is still around neutral 50, so momentum is not offering a particularly strong directional signal.
However, both the 50-day and 200-day moving averages are rising. On that basis, the hesitation looks more like a breather than the end of the advance. Crude oil is, of course, especially sensitive to geopolitical developments, which can quickly complicate an otherwise tidy chart.
Smaller-Cap Shares to Watch
- Ajax: A Break Above 7.25p Could Clear the Way: Ajax has been waiting to get through the resistance area around 7p to 7.25p, defined by the line running from May. A decisive move through it would leave relatively little chart resistance before 9p. The best-case objective is 13p by the end of November, at the top of the rising trend channel from April. The supporting signals are encouraging: an RSI 50 rebound and an upside gap through the 200-day moving average. Both the 50-day and 200-day averages are now rising, suggesting a possible golden cross later in October, when the shorter average crosses above the longer one.
- Audioboom: Perhaps the Years of Pain Are Ending: As an Audioboom shareholder for more years than I care to remember, and certainly not at this price, I would be delighted if the years of pain and suffering were finally coming to an end. At least the chart is beginning to offer some encouragement. The RSI has bounced near neutral 50 and retains an upward trend line. More importantly, support has held above the 50-day moving average throughout the month, with that average turning higher over the latest three sessions. Above 479p, the immediate projection is towards 562p by the end of October, at the top of the channel running from June. The bigger prize is 650p by the end of November. That 650p area is the main resistance before the more distant 800p level. Perhaps something is finally happening here in a nice way.
- Blackbird: The Rising 50-Day Line Was an Early Clue: Blackbird has been storming ahead since my recent interview with Ian McDonough, when the shares were around 1.75p. The technical objective is 3.2p by the end of October, or potentially sooner, particularly while the shares remain above the resistance line near 2p. The early clue was the shares rising above an already rising 50-day moving average as October approached. That was a useful leading signal before the stronger move developed. There is also the business backdrop of Elevate.io and its Google deal. Hopefully, the operational story and the improving chart can continue moving in the same direction.
- Berkeley Energia: Political Developments Add Fuel: The snap-election situation in Spain appears to have lit a fire under Berkeley Energia’s share price. The strength ahead of it also suggests that one or two people may have anticipated the development. The shares have broken the previous 34p target and moved to the second objective at 42p. Beyond that, there is relatively little obvious chart resistance until the 2017 resistance area around 70p. The optimistic scenario is a move towards 70p by the end of October. A Conservative victory in Spain is part of that bullish thesis, on the expectation of a more supportive stance towards mining and uranium. Politics can deliver surprises, though, so this remains a conditional scenario rather than a settled outcome.
- Blencowe: A Key Reversal Offers Encouragement: Blencowe has previously given us reason to worry because a rally has too often been followed by a placing. For now, the chart is improving. The shares have broken recent resistance at 6.5p. Above that, the first target is 7.7p, at the top of the chart gap, potentially in the coming days. The best-case extension is 9p by the end of October. The previous session produced a useful upside key reversal, accompanied by a push through RSI 50. The 50-day moving average is now rising as well. Together, those signals suggest that Blencowe may be entering a better patch, with the history of fundraising still worth bearing in mind.
- Coinsilium: Both Main Moving Averages Turn Higher: Coinsilium’s recent recovery has put the shares above a rising 50-day moving average. The 200-day average is rising too, making this a stronger turnaround signal than a price bounce in isolation. The obvious objective is the resistance established since November at 3.9p. That is the minimum target for the end of October while the shares hold above recent support around 2.85p. For the technical setup, the 200-day moving average at 2.6p looks like the more useful stop-loss reference. The distinction matters: 2.85p is the nearer support, while 2.6p provides the deeper moving-average threshold.
- Cykel: A U-Shaped Recovery Meets the Gap: Cykel is showing an encouraging U-shaped turnaround, with the shares now comfortably above a rising 50-day moving average. The immediate task is to finish closing the chart gap. An end-of-day close above 29p, the gap level, should give the shares a chance of retesting the previous month’s resistance just below 37p. The best-case target is 50p by the end of November, at the top of the rising trend channel running from June. The rounded recovery is promising, but the closing break above 29p is the next important confirmation.
- Microsalt: A Surprisingly Bullish Setup: Microsalt looks more bullish than I had expected. There was, from memory, a recent fundraising, but the chart itself has the classic recovery combination: a U-shaped turnaround, price above a rising 50-day average, and an RSI rebound from above 50. Set aside any preconceptions about the name and this is a setup that would normally generate considerable enthusiasm. The projected objective is 38p by the end of October, at the top of the falling trend channel. A broader falling channel can still contain a worthwhile recovery, even before the longer-term picture has fully turned.
- Reveille: The 200-Day Average Is the Immediate Hurdle: Reveille has finally reached its 200-day moving average around 10.9p. An end-of-day close above that line would open the way towards the top of the rising trend channel at 16p. A strong breakout could put that target in play by the end of October. The broader bullish case is a move towards 16p by the end of November while the shares remain above 8p. The company also has the benefit of Mike Pompeo’s arrival, bringing a prominent political name into the story. Even with that backdrop, the chart still needs to complete its break above the 200-day line.
- Roundhouse: A Strong Start on AIM: Roundhouse has arrived on AIM, although there is some debate over whether to call it an IPO or an uplisting from the Aquis market. Either way, the shares have moved from a 5p admission price to approximately 6.5p, which is a good start for those involved. The initial chart estimate is 8p by the end of October. With a fresh market debut, that is necessarily more of a guesstimate than a mature technical projection. Ideally, the shares stay above the previous data peak around 6p. Below that, 5p remains the obvious psychological reference point.
- Rockfire: A Second Attempt at the 200-Day Line: After plenty of huffing and puffing around its flagship Greek asset, Rockfire is pushing through the 200-day moving average around 0.14p at the second attempt. The recent price action has a saucer-shaped, or U-shaped, turnaround. The rally began around the turn of the month as the shares rose above a rising 50-day moving average, providing an early indication of improvement. Above the 200-day line, the very optimistic upside projection discussed is 0.20p by the end of October, fundraising permitting. That is an especially ambitious scenario, not a routine expectation. The more immediate technical point is whether the shares can sustain this second attempt to clear the long-term average.
The Common Thread: Confirmation Still Matters
The recurring positive signal is not simply a rising price. It is price rising above a moving average that is itself turning higher, preferably supported by improving momentum and a clear resistance break.
RSI 50 is a useful dividing line in this assessment. Recoveries above it strengthen several of the bullish setups, while Ethereum and gold remain less convincing below it. For background on how the indicator works, this guide to the relative strength index explains its calculation and interpretation.
There is plenty to like across these charts, but the support levels and end-of-day closing conditions are just as important as the upside targets. A promising pattern becomes more useful when there is a clear level against which to judge whether it is still working.
Important: This analysis is for information only and is not investment advice. Independently research and verify any information before relying on it for an investment decision, and seek professional financial advice where appropriate. Vox Markets is not regulated under UK financial services law.
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.
