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, Arrow, Ajax, Bioventix, Ethernity, Guardian Metal, Ocado, Pulsar, Sovereign Metals, Shearwater
The FTSE 100 is back at an important support test, the DAX is struggling to make its recovery stick, and Bitcoin is doing something rather more constructive: consolidating around a rising moving average. There is no shortage of activity among the individual shares either, with Arrow, Ocado and Shearwater offering some of the brighter charts.
These are the technical scenarios for October 20. Targets are conditional on the relevant support levels holding, not promises that the market will oblige.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
Major Indices: The FTSE Holds the Better Hand
FTSE 100: Can 10,700 Provide the Springboard?
The FTSE 100 has returned to its 50-day moving average around 10,700. That area also coincides with an old resistance line, now being tested as support. It is precisely the sort of overlap that ought to give the bulls something to work with.
If the index passes this test, the next objective is the top of the rising trend channel running from March, around 11,000. That could be achievable by the end of next month, provided the Budget and geopolitical shenanigans do not spoil the party.
Below 10,700, attention shifts to the channel floor and the 200-day moving average around 10,500. For now, the RSI remains above its neutral 50 level, suggesting the glass is still half full rather than half empty.
DAX: A Recovery That Has Yet to Convince
The DAX has not passed its bullish test. It approached the falling 50-day moving average, then retreated. It also failed to sustain its move through the resistance line running from September.
A recovery back above approximately 25,200 is needed to improve the picture. Without that, a third test of the 200-day moving average and the April uptrend line around 24,900 looks the more obvious outcome.
The RSI has faltered around the low 50s, which is not encouraging. Failed momentum recoveries near the neutral level can be a warning that the underlying trend remains weak.
The less attractive scenario is a return to June support around 24,000. Ideally, the rising channel and 200-day average hold before that becomes necessary.
Dow: Slightly Better Momentum Than the Chart Suggests
The Dow has a similar look to the DAX, although it did manage to touch its falling 50-day moving average around 52,400.
Below that level, the channel floor near 51,000 is the next reference point. The more defensive level is the 200-day moving average at approximately 50,459.
There is at least one modest positive: the RSI is around 52, still above neutral. That gives the technical picture a slightly better complexion than the price chart alone might suggest.
Cryptocurrencies: Bitcoin Consolidates, Ethereum Looks More Vulnerable
Bitcoin: A Rising 50-Day Average Offers Support
There has been no dramatic move in Bitcoin, but consolidation close to a rising 50-day moving average is reasonably constructive. That average sits around 81,200.
Above it, the immediate objective is a retest of the September and October resistance area around 87,000. For the next week or two, that looks a more sensible expectation than assuming a much larger breakout.
If support gives way, the obvious downside reference is the post-August support area around 75,000.
Ethereum: Support Is There, but Momentum Is Not Helping
Ethereum is already testing its post-August support around 2,360. It can provide a useful lead on Bitcoin, and at present that lead is not especially reassuring.
Holding 2,360 would leave room for a recovery towards the top of the range around 2,600. The problem is that the RSI is only in the low to mid-30s, while the 50-day moving average is falling at approximately 2,543.
That combination leaves the door open to a move towards the 200-day moving average around 2,144. Even with price sitting at support, the balance of the technical evidence currently favours caution.
Gold and WTI Crude Oil: Weak Momentum Versus Persistent Gains
Gold: The 4,150 Ceiling Remains Important
Gold remains tucked beneath the resistance line running from August, around 4,150. The nearby floor of the range is approximately 4,105.
Until price escapes those boundaries, there is not a great deal of fresh direction to work with. The momentum evidence, however, is less neutral: another RSI failure below 50 points towards weakness, while both the 50-day and 200-day moving averages are falling in parallel.
While gold remains below 4,150, a test of the sub-4,000 area remains the downside scenario to take seriously.
WTI Crude Oil: Another Leg Higher Is Still Possible
WTI crude oil is holding on to the best of its recent gains. Price remains above the lower edge of the recent gap around $97 and is trading around the upper edge, near $99 to $99.40.
A break through that upper zone could open another leg towards $107. That would be rather painful for prices at the pumps and beyond.
If there is a rug pull instead, the recent intraday support around $93.60 is the level I would look to hold.
Smaller-Cap Shares to Watch
- Arrow Exploration: From Underperformance to Outperformance: After underperforming for a long time, Arrow Exploration is beginning to show a rather different character. The shares have repeatedly bounced from above the 50-day moving average since the end of August, suggesting a more powerful bullish phase may be developing. The immediate reference is recent resistance around 37p. Above that, the objective is at least 47p by the end of next month, potentially sooner if momentum persists. There has also been informal discussion of possible news involving an expansion of the company’s footprint. That is unconfirmed and not a basis for the chart call. The useful evidence here is the persistent strength above the moving average.
- Ajax: Premium Fundraising Supports a Constructive Setup: Ajax has raised money at a premium equivalent to 8p, with the shares slightly higher on the day. A fundraising does not always receive that sort of welcome, so it is worth noting. The technical condition is straightforward: while the shares remain above recently broken resistance around 7p, the objective is 12p to 13p by the end of next month.
- Bioventix: Moving-Average Support and Repeated RSI Rebounds: Bioventix looks interesting because of the way it is bouncing around moving-average support, with the rising 50-day line around 16.5p providing the more constructive feature. There have also been two rebounds from the RSI 50 area. That repeated defence of neutral momentum suggests the shares may have more upside potential than the initial recovery of 20p. The attraction is the combination of price support and improving momentum. The next test is whether that combination can translate into a sustained advance.
- Ethernity Networks: A Second Attempt at the Recent Highs?: Ethernity enjoyed a strong rally at the end of last month and into this month. A bounce from its rising 50-day moving average raises the prospect of a second attempt. The upside reference is the previous month’s highs above 0.0045p. Ideally, the shares should continue to hold above the 50-day average around 0.0016p. This is still a very small company, with a market capitalisation of approximately £6 million. The technical opportunity needs to be considered in that context.
- Guardian Metal: A Broken Uptrend Changes the Picture: Guardian Metal had been one of the market’s golden children over the past two or three years, but the recent breakdown is difficult to ignore. The uptrend line around 114p had held through several tests. Once it broke at the end of last month, the shares fell sharply. They are now back near late-2025 support around 95p. If that level fails, the next downside reference is approximately 70p.
- Ocado: The Chart Looks Brighter Than the Profitability Record: Ocado may not have a consistent record of making money, but the share price is looking rather better. Having been around £3 in the previous update, the shares have pushed beyond the old early-year peak around 302p. The broader objective has been the old summer-2025 resistance area around £4. That now looks more plausible by the end of next month rather than waiting until year-end. The initial target is approximately 397p, particularly while the shares hold above the floor of the latest gap around 320p.
- Pulsar: A Recovery Towards the 200-Day Average?: Pulsar has bounced from the floor of its trend channel running from the beginning of the year, around 52p. That gives the price action a more positive look. The next hurdle is the 50-day moving average around 66p. Beyond that, the best-case objective by the end of next month is 81p to 82p, where the 200-day moving average sits. The fact that the longer-term average is still rising is encouraging. It could act as a magnet for the share price, although ideally the shares should now remain above recently broken resistance around 56p.
- Rockfire Resources: Target Reached, Funding Remains a Question: Positive news from Greece has helped Rockfire reach the previous target just below 2p. A break through that area could bring the old February resistance around 2.3p into play. The obvious question is whether a fundraising follows. There had not been one since August at the time of this update, but that alone does not establish whether another is imminent or unnecessary. For now, the shares have responded well to the news. Sustaining that progress without fresh funding pressure would be helpful for the next stage of the move.
- Sovereign Metals: A Good Company Presentation, a Weak Share Price: I attended a Sovereign Metals investor lunch last month and thought it was one of the best I had been to. The share price has, rather unhelpfully, moved in the opposite direction to that enthusiasm. From around 27p at the time, the shares are now approximately 23.75p. The hope is that support appears around 23p, where a support-line projection from the beginning of the year comes into play. The shares are also close to their one-year lows, with the December support area around 23p to 24p back in focus. It is something of a head-scratcher, but a favourable impression of the business is not a substitute for price confirmation. A recovery above 25p would be the first useful sign that the chart is beginning to improve.
- Shearwater: Contract News Adds to an Established Rerating: Shearwater has announced a central-government cybersecurity contract worth approximately £1.7 million. The shares are now close to the previous best-case technical target around 74p. That higher objective followed the achievement of the first target near 57p, identified when the shares were still trading in the 40s. The sequence of gaps is particularly impressive. The shares gapped higher at the beginning of July, held that gap, and then produced another upward gap in the second half of the month. A further gap higher on the latest news adds to the evidence of a substantial rerating.
The Common Thread: Support Has to Prove Itself
The strongest setups are not necessarily the ones with the most exciting stories. They are the ones where price is holding above identifiable support, moving averages are turning or already rising, and momentum is confirming the move.
That is why the FTSE’s 10,700 test matters, why Bitcoin’s rising 50-day average is worth monitoring, and why the gap support on Ocado is useful even after a strong advance. Conversely, the DAX’s failed recovery, Ethereum’s weak momentum and Guardian Metal’s broken uptrend all call for more caution.
For readers wanting background on the momentum indicator used throughout, this guide to the relative strength index explains the RSI framework. In these setups, the key distinction is whether momentum can hold above, rebound from or recover through the neutral 50 level.
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.
