Zak Mir takes a charting look at some of the most closely followed small caps on the London Stock Exchange. Today’s charts are FTSE 100, DAX, Dow, Bitcoin, Ethereum, Gold, WTI Crude Oil, Bradda, Clean Power, Empyrean, Great Southern, Ixico, Keller, Lift, Mears, NeoTerra, Tooru, Vianet, Victrex.
It is one of those sessions where many charts are not doing anything particularly dramatic, but there are enough important levels in play to keep things interesting. A few major indices are holding breakout territory; crypto is still trying to prove itself; gold remains awkward; crude oil is quietly constructive; and several smaller stocks are beginning to look far livelier than they have for quite a while.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100 holding support, but still grinding rather than sprinting
The FTSE 100 is more or less behaving as hoped, just at a slower pace than ideal. The market has found support at the top of the broken price channel from March, around 10,630, and that keeps the broader bullish case alive.
As long as that support area continues to hold, the next upside target remains the top of the rising trend channel from late October. That points as high as 10,900, which also fits neatly with the February peak.
If the index does slip, the lowest level on the radar for now is the 50 day moving average near 10,430. Even so, the preference is for the market to stay on the right side of 10,600 on an intraday basis.
DAX still looks strong after the breakout
The DAX delivered the big breakout last week, and so far it is holding onto it. That is the key point.
Provided the index remains above 25,500, the chart continues to suggest a move towards the top of the channel at around 26,600 by the end of the month.
Any pullback towards the 25,200 area, which marks former June resistance, can still be treated as a buy-the-dip opportunity while the broader breakout structure stays intact.
Dow pushing higher after clearing its channel top
The Dow has also stayed in buoyant form. Technically, the standout move is the break above the top of the channel from April around 52,800.
Above that level, the next obvious target becomes a projection of the November resistance line, which comes in near 54,000 by the end of this month.
At the moment, this is another chart where the breakout has happened and the market now simply needs to avoid squandering it.
Bitcoin needs to do more than tease a breakout
Bitcoin has managed to break out of a recent wedge, but the problem is that it has not followed through properly. Price action is struggling around the mid 60,000s, with resistance recently around 65,000 and before that closer to 67,000.
The 50 day moving average around 66,200 is adding pressure, and the RSI has slipped back below the neutral 50 level. That combination weakens the bullish case.
If this latest move turns out to be a bull trap, it would be a particularly nasty one. Failure to push beyond the mid 60,000s could force a retreat towards the March support line near 57,400 over the near term, possibly by the end of the month.
To improve the picture, Bitcoin really needs to reclaim and hold above that 50 day line. Only then does the bearish bias start to fade, opening the way to a possible move back towards 74,000. For now, though, that target still looks some distance away.
Ethereum still battling around key support and resistance
Ethereum remains centred on the old February support around 1,753, with price trading on either side of that area. That in itself tells you the market is undecided.
There is also nearby resistance from the line drawn from April, plus a struggle around the 50 day moving average near 1,794. Unless those barriers are cleared, the risk remains for another test lower.
Initial downside risk would be a retest of support towards 1,600, even if the market later recovers. In a weaker scenario, the March support line projection comes in closer to 1,460.
The encouraging element is the RSI, which is still around 55 and therefore above neutral. That offers at least some hope that the market can break through the resistance line and also deal with the sticky 1,830 to 1,840 resistance zone over the next day or two.
Gold remains disappointing despite holding above 4,000
Gold has been underwhelming. It is at least back on the right side of 4,000, which is more than could be said at the turn of the month, but the chart still does not look healthy.
The market is printing lower highs, and the 50 day moving average is falling. The bigger warning sign would be if the still-rising 200 day moving average at 4,488 starts to roll over as well.
For now, with lower highs and lower lows in place, and with price still beneath recent resistance around 4,230, there is a clear risk of another dip towards 4,000 and potentially lower.
The RSI also is not helping. Repeated failures around the 50 mark since mid May continue to underline how weak momentum has been. The only mildly hopeful angle is that the current wedge-like structure could eventually produce a sharp upside move, but at the moment that remains more of a possibility than a signal.
Crude oil still supported by the gap floor
Crude oil remains a relatively straightforward chart. The focus is still on the gap floor at 67.83, which has acted as support exactly as hoped.
The low was around 67.04, so anyone buying into that gap-support area would already be sitting in profit. As long as the market stays constructive, the target remains the 200 day moving average at 74.20.
There is also a touch of bullish divergence in the RSI window, with slightly lower price lows accompanied by slightly firmer RSI behaviour. It is not overwhelming evidence on its own, but it does help the bullish argument a little.
Small – Cap’s
- Bradda looking much better than it has for some time: Among the smaller stocks, Bradda has started to look one of the more promising setups. The chart appears to be shaping up for a resumption of the uptrend or a fresh breakout, and the overall picture is much improved. With a sharply rising 50 day moving average and price above roughly 2.32 to 2.75 pence, the shares look capable of retesting the May resistance area above 4 pence, perhaps by the end of next month. Ideally, the price should remain above the old October peak at around 2.25 pence.
- Clean Power Hydrogen is incredibly oversold, but still risky: Clean Power Hydrogen has gone from looking technically well behaved before its suspension to looking like one of the more brutal examples of a collapse after fundraising. Before all of that, the shares had been moving nicely within a rising trend channel and a target of 20 pence had been in view. Clearly, that is no longer the conversation. The first level to watch now is the initial high of the day around 2.25 pence. For anyone considering a speculative bottom-fishing exercise, an end of day close above 2.25 pence would be the first technical buy signal worth respecting.
- Empyrean could finally be ready to stop disappointing: Empyrean has a habit of frustrating, but this may be one of the times when it actually comes good. The stock is moving towards a golden cross and has broken recent resistance around 0.08 pence. If that breakout holds, there is room for a move as high as 0.12 pence by the end of the month. That is one to keep an eye on, because the chart is starting to do what it has too often failed to do in the past.
- Great Southern Copper breaking out of its sideways shuffle: Great Southern Copper spent a while drifting sideways, but it now looks to have broken through recent resistance at 3 pence. Above that, the chart opens up towards the top of the longer-term range and channel from last year, which points to around 4.44 pence by the end of next month. It is a punchy call, but the setup justifies it. Both the 50 day and 200 day moving averages are rising and moving towards a golden cross, while the RSI has shown several support points since the start of last month. Altogether, it gives the chart a healthier look than many peers.
- Ixico showing one of the stronger setups: Ixico has not been on the radar for a while, but the chart now looks interesting. There was a gap up off the low, followed by another gap above a rising 50 day moving average. That creates what can be described as a sideways shuffle, one of the stronger technical setups because it often leads to a significant move higher. While the shares stay above the 50 day line at 8.04 pence, the target is around 11.75 pence by the end of this month.
- Keller strong after its update: Keller responded well to its update, with the shares pushing up to resistance from January around £32.40. If momentum continues, there is an argument for a move towards as much as £33 as a best-case target, especially while the market remains above the £30 area. On that basis, any dip back towards £30 could be treated as a technical buying opportunity.
- Lift responding well despite very light buying: Lift has reacted well to recent strategic news, including the share swap. What stands out technically is that the stock was already heading into a golden cross, and the rise has happened on hardly any buying volume at all. That is actually rather impressive. The ideal scenario now is for the shares to remain above the latest support at 0.54, perhaps allowing a little room down to 0.50. If that support holds, the chart points towards 0.80 by the end of next month. As ever with an illiquid stock, the technicals can only tell part of the story, but the setup itself looks constructive.
- Mears Group still in a healthy rebound: Mears continues to look solid. The shares have rebounded well above a sharply rising 50 day moving average, and volume also appears respectable. Above the 50 day line at £4.07, the top of the channel points to as much as £4.80 by the end of next month. Ideally, the stock should now stay above £4.17, which marks recent broken resistance.
- NeoTerra bouncing where it needed to: NeoTerra, formerly Altona, has done what was hoped by bouncing from the floor of its falling trend channel around 1.90 pence. From here, the target remains the top of that channel together with the 50 day moving average, which points to around 2.75 pence by the end of next month. The RSI also appears to have its own uptrend line in place, which adds a little extra support to the recovery case.
- Tooru may finally have reached the end of a silly decline: Tooru has suffered what can fairly be called a rather silly decline, but the recent sell-off may now be over. The shares are very oversold, with the RSI down towards the 20 area. If support around 0.13p holds, there is room for a bounce back towards the 50 day moving average at 0.18p by the end of this month. This is still recovery territory rather than confirmed trend reversal territory, but at least the oversold condition gives the chart a fighting chance.
- Vianet bouncing from trend channel and 200 day support: Vianet is not a stock that gets much attention here, but the chart has improved enough to be worth noting. The shares have bounced from the floor of a rising trend channel and also from the 200 day moving average at 65 pence. That combination gives the setup a firmer base than it might otherwise have had. Above that, the chart points towards as much as 78 pence by the end of next month. It is a punchy target, but this is a punchy-looking chart.
- Victrex has gapped higher and now needs to hold the breakout: Victrex rounds things off with a chart that has become more interesting after a higher gap. The key now is whether the shares can stay above recent broken resistance at £6.58. If they do, then the minimum expectation would be a move to fill the gap up to around £7.36, possibly as soon as the end of this month. The challenge is now set. The chart has improved, but it needs to follow through.
Key levels to keep front of mind
- FTSE 100: Hold above 10,600, target 10,900
- DAX: Hold above 25,500, target 26,600
- Dow: Above 52,800, target 54,000
- Bitcoin: Needs to clear 66,200, otherwise risk back to 57,400
- Ethereum: Needs to break 1,830 to 1,840, otherwise risk to 1,600
- Gold: Below 4,230 leaves risk of another move towards 4,000
- Crude Oil: Gap support at 67.83 remains central, target 74.20
Overall, the broad market picture is still constructive, especially for the major indices, but there is a clear difference between assets that are holding proper breakouts and those that are still merely flirting with one. The DAX and Dow look cleaner than Bitcoin and gold, crude oil is quietly improving, and among the smaller names there are several charts beginning to wake up at the same time.
That usually makes for a useful hunting ground, provided the key support levels continue to do their job.
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 to 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.
