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, Alkemy, Bravura, Ceres Power, CML, Cloudbreak, Guardian Metal, Prospex, Poolbeg, RentGuarantor, Sealand, Wildcat.
Markets remain remarkably resilient, despite plenty of reasons for traders to be nervous. The major indices are holding constructive chart patterns, Bitcoin and Ethereum are still consolidating, and several smaller shares are beginning to show the kind of technical setups that can lead to sizeable moves.
The key theme remains simple: buying on dips while support levels hold. That applies to the FTSE 100, the DAX, oil, and a number of the individual shares covered below.
As always, do your own research and treat these as chart-based observations rather than hard recommendations
FTSE 100: Range Trading Near Record Territory
The FTSE 100 has not broken down. In fact, it has come very close to confirming support around 10,820, with the recent low near 10,821.4. That keeps the support line from the end of last month intact.
For now, the index is caught between 10,820 and the record area near 10,980. With the RSI around 60, the bias still looks like buying the dips within that range rather than anticipating a major collapse.
The preferred downside probe would be towards 10,760, which was July resistance. A move into that zone could provide another support test, but the current setup remains constructive while 10,820 broadly holds.
DAX: Breaking Above Its Rising Trend Channel
The DAX is looking stronger than the Dow at the moment. It is pushing above the top of its rising trend channel from March, which was around 26,300.
The next major chart target sits at 27,300, based on the upper parallel of the rising channel drawn from February. That target had initially looked more likely for the end of next month, but the current momentum means it could arrive earlier.
The important line in the sand is 26,000. As long as the DAX remains above that level, the bullish channel breakout remains in play. A more cautious scenario would involve a retreat towards late-July resistance around 25,500.
Dow Jones: Back Inside the April Rising Channel
The Dow has managed to avoid the various siren voices around geopolitical risks and concerns over a technology-sector collapse. It has moved back within its rising trend channel from April.
The top of that channel points towards 54,300. However, the Dow is relatively weaker than the DAX, and there is still a risk of filling the gap lower towards 53,300.
It is a market where the upside channel target remains visible, but the gap risk means the Dow needs more respect on the downside than some of the European indices.
Bitcoin: Still Going Nowhere Fast
Bitcoin remains a largely inactive market, although it has once again bounced from its rising 50-day moving average near 63,300. That has become the obvious dip-buying area.
Above that, the first upside target is 67,000. The best-case target is the 200-day moving average around 69,750, but there is not enough momentum yet to get overly excited beyond that.
On the downside, early-July support at 61,000 remains the main risk level. The RSI is also just about holding a creative rising support line around the 47 area. Until Bitcoin starts moving decisively, it remains a trading range rather than a high-conviction breakout story.
Ethereum: A Stronger Consolidation Pattern
Ethereum is also trapped in a tight range, but its chart is healthier than Bitcoin’s because it remains above a rising 50-day moving average at 1,813.
Normally, a prolonged sideways consolidation above a rising 50-day line can lead to a sharp move higher. That move has not happened yet, but the technical ingredients are there.
The target is the 200-day moving average around 2,034, potentially later this month. Any dip back towards the 50-day line should be treated as a buying opportunity while the support remains intact.
There have also been three rebounds from RSI 50 this month, which is a healthy sign. The issue is not the pattern, it is simply the absence of the expected acceleration so far.
Gold: Recovery Targets Remain in Place
Gold is attempting to continue its recovery after trading below 4,000. The first technical target is the 200-day moving average near 4,499.
Beyond that sits the late-May resistance zone around 4,600 to 4,605. That area could come into play by the end of next month, provided recent support around 4,360 remains in place.
The pattern is one of recovery rather than a completed breakout, so holding the recent support zone is key to maintaining the bullish case.
WTI Crude Oil: Bullish Above $80
WTI crude oil has a bullish setup, even if the move has not yet developed as quickly as hoped. The top of the falling trend channel is around 90, which is the best-case target at present.
Before that, there is a gap to fill near 87. On the downside, the 50-day moving average near 79.17 provides support.
The RSI is above neutral at just under 54, tilting the balance of probability higher. The bullish case remains valid while oil stays on the right side of 80.
Small-Cap Share Charts to Watch
The small-cap names are where some of the more energetic chart formations are appearing. As ever, the key is whether price can hold above broken resistance and rising moving averages on an end-of-day closing basis.
- Alkemy: Gap, Bull Flag and Moving-Average Support: Alkemy has a very encouraging setup after gapping higher last week and moving up towards the rising 200-day moving average at 316p. An end-of-day close above that moving average would open up a move towards the top of the triangle from March, as high as 380p by the end of next month.
- Bravura: Early-Stage Breakout Potential: Bravura is an interesting chart because there is limited historical information to work with, following a decent company update. That lack of chart clutter can sometimes make a developing breakout more compelling. The notional top of the channel sits at 186p. That target remains valid while there is no end-of-day close below the middle of the gap zone near 150p.
- Ceres Power: Looking for a Close Above 482p: Ceres Power has pushed through its rising 50-day moving average and is now attempting to establish itself above the key level around 482p. An end-of-day close above that level would target the next resistance zone near 554p by the end of next month. Ideally, the shares remain above broken resistance around 445p.
- CML Microsystems: A Punchy Chart With a 416p Target: CML has gapped through recent resistance around 290p. Above that level, the top of a rising trend channel points as high as 416p by the end of next month. It is a punchy target, but this is a punchy chart. In the near term, the main requirement is to stay above old June resistance around 375p on an end-of-day closing basis. A convincing close above that area would suggest the shares are ready to move sharply higher.
- Cloudbreak: A Straightforward Range Trade: Cloudbreak has bounced from the floor of its recent range near 0.39p. The immediate challenge is an end-of-day close above the 50-day moving average at 0.52p. If that breakout arrives, the next target is June resistance around 0.76p by the end of next month. Until the moving average is cleared, this is best viewed as a range trade. The bounce from 0.39p is encouraging, but confirmation is needed above 0.52p.
- Guardian Metal: A W-Shaped Turnaround Developing: Guardian Metal has broken recent resistance at 175p, after reported buying by the chief executive in the 140p to 150p area. The main immediate target is the major resistance line at 200p. If that level breaks, 250p becomes the next upside objective. The chart is building a W-shaped turnaround and has filled the gap higher. That is exactly the kind of pattern that can support a stronger recovery if the 200p barrier gives way.
- IQE: Attempting to Clear April Resistance: IQE is trying to break above resistance from April around 46p. A clean move above that line would put the upper 50s back in play, with June resistance near 60p the more ambitious target. The shares are above the 50-day moving average at 45p, which gives the chart a constructive foundation. The 46p line is now the key level to watch.
- Prospex: Signs of Accumulation: Prospex has broken through its 200-day moving average around 3.25p. Above that, the target is around 4.4p by the end of next month. This may not be a spectacular rally, but the chart has begun to show signs of accumulation. Recent candles have repeatedly opened near their lows and closed near their highs, suggesting sustained buying interest. The break above the 200-day line is particularly important because it shifts the medium-term technical picture in a more positive direction.
- Poolbeg: Bull Flag Breakout in Progress: Poolbeg has broken out of a bull flag through 8.4p. With both the 50-day and 200-day moving averages rising sharply, the technical picture looks increasingly positive. The top of the rising trend channel points to 10.4p by the end of the month. The shares appear to be gaining traction both fundamentally and technically.
- RentGuarantor: First Target Cleared: RentGuarantor has already exceeded its initial target near 52p. The next target is 70p, potentially as soon as the end of this month. That objective is based on the upper parallel of a rising trend channel extending from July, or broadly from the summer of last year. The shares are progressing steadily within that rising structure.
- Sealand: Strong Candles and a Rising Target: Sealand is progressing through its targets, with 0.4p as the first level and 0.5p as the second. Above those levels, the refreshed target is 0.66p by the end of next month. The chart is notable for its sequence of clear bullish candles, which suggests decent accumulation is taking place.
- Wildcat: Gold Producer Theme Needs a Breakout: Wildcat could benefit from the appeal of a potential gold producer in the current environment, but technically it still needs to clear a major barrier. The key resistance line comes in around 0.09p, dating back to last October. If the shares can break that level in the coming days, a move towards 0.17p during August becomes possible. That target is based on a resistance projection from the top of the triangle formed around July last year. Until 0.09p breaks, however, it remains a setup rather than a confirmed move.
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.
