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, Arkle, Bezant, Cellbx, Delta Gold, GEO, Hvivo, Hemogenyx, MedPal, Rc365, Seraphim, Tooru, WPP.
The broad picture today is mixed. The major indices are still trying to hold constructive technical structures, but crypto remains fragile, gold has lost some important support, and crude is still leaning lower. On the small-cap side, there are a handful of classic breakout and consolidation setups that look far more interesting than the large macro trades.
Here is the state of play across the FTSE 100, DAX, Dow, Bitcoin, Ethereum, gold, WTI, and a selection of UK stocks.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100 still trapped inside its rising channel
The FTSE 100 remains in the rising trend channel that has been in place since October. Price is moving around the 50 day moving average, which is sitting near 10,393, and that level is doing a lot of the heavy lifting at the moment.
As long as the index stays below the 50 day line on an end of day closing basis, there is a risk of a move down toward 10,383 and then a retest of the lower boundary of the channel near 10,250. If the market can reclaim the 50 day line properly, the first resistance level comes in around 10,490.
So for now, the expected range looks fairly clear:
- Support: 10,383, then 10,250
- Resistance: 10,393, then 10,490
The RSI is sitting just under the neutral 50 level. That matters because there have already been a couple of failed RSI recoveries around that midpoint, and that often acts as an early warning sign when momentum is weakening. Even so, the current expectation is not for anything dramatically worse than the 10,250 area if the market does soften.
DAX trying to recover after recent volatility
The DAX has been more dramatic, with plenty of gapping in both directions. Even with that noise, the index appears to have responded to the lower boundary of the rising channel from March. There was a slight overshoot lower, but the 24,600 zone was always the area where support was expected to appear.
Price did briefly slip closer to 24,400, but the bigger technical backdrop still has some positives. There has recently been a golden cross between the 50 day and 200 day moving averages, and the RSI has bounced from around the 50 area. Those two features suggest the index may still be able to recover toward 25,000 and potentially 25,300 later in the month.
For the downside, the 200 day moving average near 24,200 is the key line in the sand.
- Support: 24,600 initially, then 24,200
- Resistance: 25,000, then 25,300
Dow holding up, but a wedge breakdown is still possible
The Dow has had a more difficult few sessions, and that struggle may not be finished yet. The key area to watch is around 50,600. As long as there is no end of day close back below that zone, the strategy remains to buy dips and respect the uptrend line from March.
On that basis, the upside target is 53,100 by the end of next month, and possibly sooner if momentum improves. If the uptrend line gives way, the next likely support area becomes the 50 day moving average at 49,167. That level matters even more because the area just above 49,000 acted as support for much of last month.
There are still reasons to give the bulls the benefit of the doubt:
- The 50 day and 200 day moving averages are both rising
- The RSI is around 56, comfortably above neutral
That said, it would be fair to describe the pattern as a rising wedge, and rising wedges can break lower. So while the preferred stance is still constructive above the March trend line, there is no point pretending the downside risk has vanished.
Bitcoin remains weak below 65,000
Crypto still looks unwell, and Bitcoin has not done much to improve the mood. The 65,000 area is now acting as resistance, and while price remains below that level the obvious risk is a move back to 60,000.
There are much more bearish calls floating around, and technically there is a route to them. The worst case scenario would be a drop toward the lower boundary of the falling trend channel in place since last July, which points down toward 42,000. That is not the base case, but it is on the chart.
A more realistic bearish outcome, if weakness continues, may simply be a move into the upper 40,000s rather than a full collapse.
- Resistance: 65,000
- Initial support: 60,000
- Worst case channel target: 42,000
Ethereum looks worse than Bitcoin
Ethereum has been under heavier pressure than Bitcoin. The key technical damage is the break below the old February support at 1,753 dollars. That level now becomes resistance.
As long as Ethereum stays below 1,753, the risk is for further downside toward 1,500, and possibly all the way to the lower boundary of its falling trend channel around 1,000. That would obviously be a very severe move, but it is the chart risk while the market remains under the broken support level.
Gold has lost an important long term support level
Gold has also deteriorated technically. The notable event here is the move below the 200 day moving average, which is something not seen for a very long time. That alone is enough to make the chart look a lot less friendly than it did previously.
While price remains below the May support area around 43.66, there is a risk of a retest of the March support near 40.98. In a more negative scenario, the lower boundary of the falling trend channel from January comes into play around 38.30.
Resistance levels are stacked above the market:
- Initial resistance: 44.37 at the 200 day moving average
- Stronger recovery target: 46.21 at the 50 day moving average
At the moment, though, gold simply does not have much bounce to it. Below that old May support, it remains a weak chart.
WTI crude oil still points lower
Crude has been choppy, but the technical message is still fairly straightforward. Price failed below the 50 day moving average while that average was still rising, and that was followed by a lower low. Now the 50 day line itself has started to turn down.
That shift suggests the market is targeting the lower boundary of the falling trend channel from March, near 83 dollars. There is also scope for a move toward 80 dollars, which marked support in April.
The RSI has also produced a failed recovery around the 50 level, and that weakness has lined up neatly with the failure at the 50 day average. So far, the technical picture has been working as expected.
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.
