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, Arc, Beowulf, Delta Gold, Defence Holdings, Diales, European Green Transition, Fragrant, Mindflair, Metir.
The broad market tone has turned more fragile, and several major charts are now either testing key support or slipping into outright negative formations. There are still a few constructive setups around, especially in selected small caps, but the bigger picture across indices, crypto, metals, and oil looks less forgiving than it did not long ago.
Here is the state of play across the FTSE 100, DAX, Dow, Bitcoin, Ethereum, gold, WTI crude, and a run-through of a handful of stocks with interesting technical setups.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100: Breakdown risk now points to the 200 day moving average
The FTSE 100 has done exactly what bulls did not want to see. It has broken beneath the floor of a rising trend channel that had been in place since October.
There is a small allowance for interpretation here, because the lower edge of that structure sits close to the 200 day moving average anyway. In practical terms, though, the implication is much the same. A channel break brings the 200 day line into focus, and that currently sits around 9,979.
The warning signs were there. Price had already been struggling below resistance near 10,480, and the market remained trapped in a negative consolidation. A break under 10,260 opens the way first to last month’s support around 10,151, and then potentially down to that 200 day average.
The RSI had also been flashing caution. A repeated failure around the neutral 50 area often tells you momentum is not strong enough to sustain the trend, and that same signal previously showed up before the March weakness that dragged the market towards the 9,600 area.
This may not become that severe, but the 200 day moving average is now the obvious danger zone. To repair the chart properly, the market really needs an end of day close back above the 50 day moving average, which is near 10,084.
DAX: False breakout has turned into a cleaner sell signal
The DAX had looked as though it might break free through 25,000 and above the January resistance line, but that move has failed. What initially looked encouraging has now started to resemble a classic false breakout.
The first downside reference point is the 200 day moving average, now around 24,180. That is uncomfortably close. Below that, the risk increases for a move towards last month’s support near 23,800, which is weaker than many would have expected given how positive the chart looked earlier in the month.
Momentum has not helped. The RSI has already fallen below the neutral 50 level and price has slipped out of the rising trend channel that had been in force since March, around 24,600. From a charting perspective, that channel break was a straightforward sell signal.
Dow: Wedge concerns remain, but momentum has not completely rolled over
The Dow is giving off the look of a rising wedge, which is often a warning pattern. Although the market managed to recover back inside that formation, it still appears vulnerable to a test of lower support.
The 50 day moving average around 49,281 is the level to watch, along with the support zone from May. Even if the market does recover after that, it is hard to make a convincing upside case unless price can break above 52,000.
If that hurdle is cleared, there is room towards 53,000, based on a time projection tied to the November resistance line, potentially by the end of the month. Until then, the market looks a bit stretched.
The encouraging factor is the RSI, which is still holding in the upper 50s. That is often a decent position for an advance to restart. So while the structure looks uncertain, the momentum picture is not yet fully bearish.
For that reason, the current setup may be better treated as a price channel rather than a fully formed wedge breakdown. On that reading, the recent low marked the lower boundary, and the better risk reward long area would probably be closer to the 50 day average than at current levels.
Bitcoin: Weak under 65,000 with lower channel support looming
Bitcoin is still looking soft. The market failed at the old March support around 65,000, and once that level rejected price, the chart lost a lot of urgency on the upside.
The immediate expectation is a retest of the February and recent support zone around 59,000. But the broader risk is bigger than that. A falling trend channel is now in place, and if the weakness deepens, the lower boundary of that channel sits all the way down around 42,000 to 43,000.
That is clearly not the base case right now, and the more realistic near term downside remains somewhere in the upper 40,000s if things deteriorate further. Even so, the channel itself has behaved credibly, particularly on the upper side where it has capped previous rallies.
Ethereum: Failure under former resistance keeps pressure on 1,500
Ethereum has also lost ground and is trading with a weaker technical profile. The key issue is the failure beneath the old February resistance zone around 1,753.
Price stalled around 1,720, which reinforces the idea that former resistance is still acting as a ceiling. As long as Ethereum remains below 1,753, the path of least resistance looks lower.
The first likely destination is a retest of the 1,500 area. If the downtrend persists into next month, the worst case reading from the chart points towards 1,000.
Momentum is not helping here either. The RSI has failed in a way that leaves the market looking technically unhealthy, which adds to the negative tone.
Gold: Store of value or not, the chart looks poor
Gold is supposed to be the safer place to hide, but the chart is not offering much comfort at the moment. The market appears to be racing towards the March low around 4,098, and that retest now looks highly likely.
Once that level is revisited, a rebound would not be surprising, but the broader structure is still a falling trend channel. The lower edge of that channel points towards roughly 3,800, possibly by the end of this month or next month if weakness continues.
The key resistance overhead is the broken May support near 4,370. As long as price remains below that zone, the bears are in charge.
There has also been a failure below the 200 day moving average around 4,440, which worsens the technical damage. Because the drop has been so sharp, it is difficult to define a tight stop on any short term bearish position, but the chart itself still looks heavy.
WTI crude: Soft market with 83 dollars the main downside marker
Crude oil is under pressure at the same time as equities are struggling, which is not the usual combination people look for when trying to draw comfort from lower energy costs.
The minimum downside target on the chart is around 83 dollars, which matches the floor of the falling trend channel that has been developing since late March.
On the upside, a recovery towards the 50 day moving average near 96.84 would be the best case, but that feels ambitious from current levels. More realistically, a bounce might struggle in the 92 to 93 dollars region.
Small-Cap’s
While the major markets are looking patchy, there are still several individual stocks setting up reasonably well. Some have already broken out, others are sitting just below key triggers.
Arc Minerals: Arc has one of the cleaner small cap recovery charts around. The shares gapped above the 50 day moving average and then held above it, even though that average is not yet trending higher in a meaningful way. The 50 day line comes in around 0.44p, and while price stays above that level, the next target is the 200 day moving average near 0.63p. This stock has frustrated plenty of people over the years, so calling a sustained rally has been a thankless exercise.
Beowulf: Beowulf reacted well to last week’s announcement and is now trying to consolidate those gains rather than giving them straight back. The key near term level is the 200 day moving average around 8.7p. A close above that level over the next few sessions would improve the picture materially and could open the way towards 13p, which lines up with the upper end of the broader rising channel. The ideal scenario is that the stock now holds above 7.12p, which was March resistance and should now act as support.
Beeks Financial: Beeks has already triggered a bullish reversal through the middle of a W shaped base at around 178p. That break projected a move towards the 200 day moving average at 207p, and price has now reached that level. There may still be a bit more in it. The next level above is around 228p, which matches an October resistance line. If the stock can keep going, the stronger upside target is 240p, corresponding with February resistance and potentially achievable by month end. The chart has also formed a bear trap style island reversal, and ideally the floor of the gap near 195 now holds on any pullback.
Delta Gold: Delta Gold remains very active technically. After reaching the upside target around 210p, the stock has pulled back sharply, but there are signs of support returning near 155p, which also marks the initial June resistance turned possible support. That gives aggressive traders a possible entry point, with a stop below 155p and a retest of the 200p area as the objective. The more cautious interpretation is that the correction might not be over. If the stock continues to slide within its channel, it could still revisit the low 130s. The RSI remains above 50, so momentum has not fully broken down, but this one is a split decision between early support and waiting for a deeper dip.
Defence Holdings: Defence Holdings has a very appealing setup after a well received announcement. The shares have been moving sideways above a rising 50 day moving average, and there is an unfilled gap to the upside as part of the structure. Price is now pushing through the top of a bull flag around 1.35p. If that breakout sticks, the next target is around 1.61p, which is where the 200 day moving average sits and could be reached by the end of the month. One of the more reliable patterns in small caps is a sideways drift above a rising 50 day line. When it resolves properly, it often leads to a sizeable move. This one has the look of that kind of setup.
Diales Group: Diales also improved after a lively announcement. The shares are pressing towards fresh near term highs, and the chart remains straightforward. As long as the stock stays above the 50 day moving average at around 27p, the upside target remains 40p, potentially by the end of next month. The RSI trend line is also pointing the right way, which helps reinforce the positive bias.
European Green Transition: European Green Transition is breaking to new near term highs and continues to build a constructive pattern. The initial target has been 11p to 11.2p, which looks close. Beyond that, an end of day close above those levels would bring the upper boundary of a broadening triangle into view, with scope towards 16p by the end of next month. For the bullish case to remain intact, the stock should continue to hold above the recently broken resistance around 10p.
Fragrant Prosperity: Fragrant Prosperity has attracted plenty of hope without much reward in the share price, but the chart is at least showing signs of life. The stock is bouncing from a rising 50 day moving average and lifting off the lows. That may not translate into explosive upside, but it does suggest room towards 0.58p, where the 200 day moving average meets the top of a falling trend channel that has been in place since this time last year.
Mindflair: Mindflair has picked up a bit of market buzz, and the chart explains why. The shares have been tracking a rising trend channel while staying above a rising 50 day moving average. If the stock can hold above 2.75p, which was the initial June resistance, then there is room for a move towards 4.5p by the end of next month. The backdrop here is partly driven by the continued enthusiasm around weight loss drugs and related themes, which has helped revive interest in the name.
Metir: Metir stands out as arguably the strongest chart in the list. The shares are rising off a rising 200 day moving average, and there is already an unfilled upside gap in place. Importantly, the stock has held the top of that gap around 0.77p. The longer that level holds, the greater the chance of a climb towards the top of the falling trend channel from September last year. That target sits around 1.2p and could come into play next month. It is an aggressive target, but the chart is aggressive in a good way. For a more cautious approach, waiting for an end of day close above the January resistance at 0.91p would provide a cleaner trigger before aiming for that larger move.
Final market take
The larger indices and risk assets have clearly lost momentum. The FTSE 100 and DAX are both flashing more serious warnings, Bitcoin and Ethereum remain soft, and gold is not behaving like a market that wants to turn higher just yet. Crude is also drifting lower, which does little to improve the broader tone.
Against that backdrop, stock selection matters more than ever. Several of the smaller names still have constructive technical patterns, especially where price is holding above rising moving averages or breaking through well defined resistance. In this sort of environment, those cleaner chart setups tend to stand out even more.
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.
