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, Avacta, Dianomi, Energy Pathways, Empyrean, East Star, EARNZ, Gem Diamonds, Gfinity, LPA, Smarter Web, Zanaga.
The market is heading into a major central-bank week with a fairly defensive tone across the main indices. The key question is whether current support levels can hold ahead of the Federal Reserve decision, particularly if interest-rate expectations continue to weigh on risk assets.
Some individual charts remain very constructive, especially among smaller UK shares. Bitcoin is consolidating rather than collapsing, crude oil has fresh geopolitical momentum, and several stocks are showing the sort of moving-average and breakout signals that can lead to sharp moves.
As always, do your own research and treat these as chart-based observations rather than hard recommendations.
FTSE 100: 10,600 Is the Immediate Line in the Sand
The FTSE 100 is sitting near the floor of a price channel based around 10,600. That level also corresponds with support seen in mid-July, making it the obvious area to defend.
An end-of-day close below 10,600 would weaken the structure materially. In that case, the next serious destination would be the 200-day moving average at around 10,383, which also aligns with early-July support close to 10,400.
The RSI is just below 40, so the market is not yet technically oversold. That leaves room for another move lower before bargain hunters have a strong momentum signal to work with.
On the upside, the first recovery target is the 50-day moving average near 10,738. Beyond that, July resistance comes in around 10,850. Those levels look some way off for now, but holding 10,600 would be an important start.
DAX: Similar Pressure, Similar Support Structure
The DAX is presenting a near-identical picture to the FTSE. It remains within a rising channel dating back to the spring, with the channel floor close to 25,400.
That level is especially important because it also marks the top of the July gap. If 25,400 breaks on an end-of-day basis, the focus shifts to the 200-day moving average and July support around 24,700.
A more constructive recovery would require a return above the 50-day line at roughly 25,750. Closing back above that level would put the post-March uptrend back on a firmer footing.
Dow Jones: Holding 52,000 Before the Fed Decision
The Dow is a little harder to read at present, partly because the market is waiting for the Federal Reserve. The previous falling channel has been broken, although the more relevant support channel may now be lower.
The lower channel line points towards the 200-day moving average just beneath 50,000, while the channel level itself sits closer to 50,500. A move into that zone would clearly not feel comfortable.
For now, the Dow is clinging to the late-July and early-August support area at 52,000. Ideally, that remains the worst of the downside before Wednesday’s news.
Bitcoin: A Constructive Consolidation Between 75,000 and 82,000
Bitcoin remains range-bound, broadly trading between 75,000 and 82,000. But this is not necessarily a bearish range. The price action resembles a small rising flag, which can often appear halfway through an upward move.
An end-of-day close above 82,000 would be the breakout signal to watch. That could open the way towards the February resistance projection and the upper boundary of the broader triangle, potentially reaching 94,000 by the end of next month.
On the downside, the key strength test is the top of the prior gap around 72,000. Holding above that level would be a solid sign. In a weaker market, it would be normal to see one or two dips towards 72,000, but the current consolidation has held up well.
The recent golden cross between the 50-day and 200-day moving averages adds another supportive technical factor. That does not guarantee an advance, but it reinforces the improving medium-term backdrop.
Ethereum: Failed Breakouts, but Still Close to a Move Higher
Ethereum has been caught in a 2,350 to 2,570 range. It attempted to break out on both Thursday and Friday but failed to close decisively above the upper boundary.
The important level remains 2,570. An end-of-day close above it would point towards the top of the rising channel from February, which projects to around 2,900 by the end of next month, potentially sooner.
Ethereum led the crypto market higher during August, so it would not be surprising if it were again the first of the major cryptocurrencies to signal a fresh upside move. The repeated tests of the range ceiling suggest that the market may be getting ready.
Gold: The 50-Day Moving Average Must Hold
Gold is still struggling under the pressure of a rising interest-rate environment. It is nevertheless holding just above the 50-day moving average at 4,268.
As long as that support survives, the upside objective is the 200-day moving average at 4,538, ideally by the end of the month. The market is still just inside its rising June trend channel, although the RSI below 50 leaves the immediate bias tilted to the downside.
A break back below the 50-day line would be a poor technical development. It would raise the prospect of another test of the 4,000 area, which would be a disappointing outcome after gold’s earlier strength.
WTI Crude Oil: Geopolitical Risk Pushes the Price Higher
Crude oil is looking increasingly strong following concerns around disruption in the Red Sea. The market had already carried an upside target near 101 to 102 dollars when prices were in the upper 80s. At that stage, the catalyst was unclear. Geopolitical pressure has now supplied one.
Above 102 dollars, the best-case chart target is 115 dollars by the end of next month, or potentially sooner. The bullish case remains valid while WTI stays above 93 dollars, a level that currently appears comfortably below the market.
Small-Cap Share Charts to Watch
- Avacta: A Second Attempt at Breaking Higher: Avacta has attracted encouraging market chatter around its new CEO, debt repayment and wider capital structure. The chart is also beginning to support the improving tone. The shares are making a second attempt to push through the low-70p area and are trading above both the 50-day and 200-day moving averages, currently near 68p. An RSI rebound above 50 adds another positive signal. Above the low-70p resistance zone, the target is the low 80s by the end of next month, with an earlier move possible if momentum picks up. The larger prize would be a return to £1 by year-end, matching the top of the rising channel from last September. The bullish view depends on the shares remaining above 65p, which represents the floor of that rising channel.
- Dianomi: A High-Octane Step Formation: Dianomi is not a heavily followed name, but the chart has become very interesting. The shares have already reached an initial target around 33p and are rising in a strong step formation. This pattern is notable because the shares had previously fallen in a similar stepped fashion. The structure has now reversed, suggesting that the market may have established a more durable turnaround. Above 32p, the next target is as high as 58p by the end of next month. The price action is backed by repeated bounces from a rising 50-day moving average and a run of powerful candles that have frequently opened near their lows and closed near their highs. That is the type of price action associated with a high-energy advance.
- Energy Pathways: Signs of Accumulation Above 7p: Energy Pathways has traditionally been a leaky share, which makes its current action more notable. The shares are trading above a rising 50-day moving average at around 7p. There is also an unfilled upside gap, an encouraging development, alongside two strong consecutive candles. The impression is that the market may be accumulating stock rather than selling into rallies. While the price remains above the 50-day line, the target is around 10.5p, at the top of the rising trend channel, by the end of this month.
- Empyrean: Aiming for 0.12p After the Initial Move: Empyrean has managed to rise and, crucially, stay up. The first target around 0.098p to 0.1p has been met, bringing the next objective into view. Above the 0.1p area, the chart points towards 0.12p by the end of the month. The key support level is former July resistance at 0.07p. Remaining above that broken resistance would preserve the current bullish setup.
- East Star: Breakout From a Mid-Move Consolidation: East Star has broken out of a mid-move consolidation pattern and has the added interest of a celebrity backer. The chart itself is the more important feature, with the breakout opening the way to 10p to 11p. The upper parallel of the rising channel from July lies just below 10.5p. That creates a reasonable target for the end of next month, although the pace of the move suggests that it may be achievable by the end of this month. The upside case remains valid while the shares hold above recent broken resistance at 8.3p. Ideally, the price should remain on the right side of 8p.
- EARNZ: A More Serious Recovery Takes Shape: EARNZ has put together a decent rise over the past week, moving up from its lows and breaking above a rising 50-day moving average. The shares have also moved through the 200-day moving average around 4.3p on a weekly closing basis. The initial target is 5.1p, at the top of a falling trend channel dating back to last September. But the setup is now improving enough to justify an upgraded target. The top of the October triangle pattern projects as high as 7p by the end of next month. Whatever happens, the key is to stay above 4p, the old December support zone.
- Gem Diamonds: Breakout Above 11p Opens an 18p Target: Gem Diamonds has produced a breakout from a mid-move consolidation pattern through 11p. That is a significant technical development. Above 11p, the late-2023 resistance projection points towards 18p by the end of next month, perhaps sooner if the current momentum continues. The chart looks capable of reaching that objective before the end of the month, but the important defensive condition is that the shares stay above 10p.
- Gfinity: Several Bullish Signals Arrive Together: Gfinity has been a frustrating share for long-suffering holders, but the current setup looks one of the better technical situations around. The shares are approaching a golden cross between the 50-day and 200-day moving averages. They also found support above a rising 50-day line at the beginning of the month, which is one of the stronger signals in chart analysis. Friday added further encouragement with a key reversal to the upside and an RSI rebound through 50. Above 0.06p, the target is 0.08p by the end of the month. The main requirement now is a proper, sustained turnaround rather than another brief spike.
- LPA Group: Strong Fundamentals Meet a Positive Chart: LPA Group delivered an update that was hard not to like. The company reported a healthy pipeline, strong performance and expectations for earnings to come in ahead of current market forecasts. The wider macro backdrop remains a concern, but it does not appear to be causing meaningful damage at present. Technically, the shares are close to an initial target around 93p. A sustained move above that level could point to a much more ambitious target of £1.15 to £1.16 by the end of next month. That is an optimistic projection, but this is currently an optimistic company with a chart that is beginning to reflect it.
- Smarter Web: A Breakout With Recovery Potential: Smarter Web had already been looking good in recent weeks as the shares bounced from their lows above a rising 50-day moving average. That type of setup can provide the foundation for a substantial rally. The initial target at 36p, representing the top of the falling trend channel from February, has been broken. News around the company’s preferred-share plans may provide an additional catalyst. Above 36p, the next objective is 48p by the end of next month, with scope for more if momentum builds. Given the scale of the historic losses, any development that helps the shares recover a meaningful part of that decline would be welcome. The chart has several supportive features: an uptrend in the RSI window, a key reversal higher on Friday, and a break through the 36p target on the same day.
- Zanaga: A Punchy Call From a Broadening Triangle Base: Zanaga has a history of periodic bursts of bullishness, and another such phase may be developing. The shares are finding support at the 50-day moving average around 3.8p, within a broadening triangle base. Above 3.8p, the target is the 200-day moving average and the top of the triangle near 5.25p by the end of next month. It is a punchy target, but the RSI has moved above the neutral 50 level and recent candles have been encouraging. The technical ingredients are in place for Zanaga to deliver, provided it can maintain support above the 50-day line.
The Levels That Matter Most
The broader market backdrop remains uncertain ahead of the Federal Reserve decision. For the major indices, protecting nearby support is more important than chasing upside targets. The FTSE needs to hold 10,600, the DAX needs to defend 25,400, and the Dow ideally stays above 52,000.
Elsewhere, Bitcoin and Ethereum are close to range breakouts, gold is fighting to preserve its 50-day moving average, and crude oil remains supported by geopolitical uncertainty.
Among the small-cap names, the most compelling charts are those combining a rising 50-day moving average, broken resistance, positive RSI action and strong closing candles. Dianomi, Gfinity, Smarter Web, Avacta and EARNZ all have multiple technical factors working in their favour, while the stated support levels remain the points to respect.
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.
