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, CleanTech, DFS, Enquest, Itaconix, ImmuPharma, Mercantile Ports, Novacyt, Orcadian, Revolution Beauty, Robert Walters, Renalytix, Serica, The Works.
The broad picture remains constructive in several places, with the FTSE 100 offering one of the cleaner bullish consolidation setups on the board. Elsewhere, the DAX and Dow need to prove themselves at key moving averages, Bitcoin remains range-bound, Ethereum looks increasingly perky, and crude oil is setting up for a potential continuation move.
As always, do your own research and treat these as chart-based observations rather than hard recommendations.
Among the smaller shares, there are a number of charts where support at rising moving averages, breakouts from flags, and RSI rebounds are beginning to line up. As ever, the levels matter. A bullish chart is only bullish while it holds its key support.
FTSE 100: Consolidating Above a Rising 50-Day Average
The FTSE 100 has put together several days of decent price action. It is consolidating sideways above a rising 50-day moving average, which is one of the better technical setups for a potentially substantial move higher.
The index has floated above the rising 50-day line since 10 July. The immediate task is to clear 10,620. A sustained move through that level would put a retest of 10,750 in play by month-end, potentially higher if momentum really gets going.
On the downside, the important floor is around 10,400, the base of the rising trend channel from March. There has also been an RSI rebound from the neutral 50 area, providing a second bullish signal. The combination of price above a rising 50-day average and RSI holding above 50 is difficult to ignore.
DAX: Stuck Between Major Moving Averages
The DAX is more of a waiting game. It is caught in no man’s land between the 50-day moving average around 24,800 and the 200-day line near 24,400.
An end-of-day close back above the 50-day average would restore the more positive outlook and could open the way for a gap fill towards 25,400 over the following week. The FTSE strength could be a helpful lead here.
There is also a reasonable argument that the DAX has not truly broken out of its broader channel. If the channel is drawn with a slightly gentler upper boundary, the outlook over the next month improves, with the main resistance projection pointing towards the 26,300 area.
Dow: 52,000 Is the Key Line in the Sand
The Dow has been trading in a tight range, and for the bullish case that range needs to hold. Friday’s close sat around an uptrend line from the previous month, giving 52,000 importance as near-term support.
Holding 52,000 would favour a rebound towards July resistance through 53,300. If 52,000 fails, though, the next likely downside area is the 50-day moving average near 51,200.
The warning sign is the RSI, which has already slipped lower. That creates a divergence from the more positive FTSE setup and means a break of 52,000 cannot be ruled out.
Bitcoin and Ethereum: Range Versus Momentum
Bitcoin remains boxed in
Bitcoin is trading either side of its 50-day moving average around $63,000. The range is straightforward:
- Resistance: $67,000
- Support: $61,000
- RSI: around 52
With the RSI fractionally above neutral, the technical balance is tilted slightly towards a push to $67,000 rather than another immediate test of $61,000. But this is still a range market until one of those levels breaks decisively.
Ethereum looks stronger
Ethereum is comfortably above its 50-day moving average at roughly $1,737, which is a much better look. The first upside objective is late-May support around $1,975.
Any dip towards the 50-day line currently looks more like a buying opportunity than a technical disaster. The key feature is that Ethereum has produced three RSI bounces above the neutral 50 level. That often signals that buyers are stepping in on weakness.
It may be the calm before a sharper acceleration higher. That is a punchy call, admittedly, but the chart has the ingredients for it.
Gold: Still Soggy Below RSI 50
Gold remains soggy. It is trying to work its way through short-term resistance around 4,055 to 4,057, but the RSI has repeatedly failed below the neutral 50 area. That keeps the near-term outlook cautious.
If recent support around 3,950 holds, gold could test the 4,055 area again and then potentially target 4,200. At present, though, the more likely outcome is continued consolidation.
The practical range to watch is:
- Lower channel support: around 3,850
- Upper resistance: around 4,055 to 4,070
WTI Crude Oil: Bull Flag and Inverse Head-and-Shoulders Setup
Crude oil ended the week in relatively strong shape. The chart resembles a mid-move bull flag, a consolidation pattern that can precede a continuation higher.
A break through $81 would be the key trigger. That could send the price towards the 50-day moving average and fill the gap towards $83. The more ambitious target is $86.
Support sits at the base of the flag around $78. The pattern also has the appearance of an inverted head-and-shoulders breakout, adding to the positive technical case. Late-Friday trading was softer, so the market still needs to confirm the move, but the underlying setup looks strong.
Small-Cap Shares on the Radar
- CleanTech Lithium: Bounce from channel support: CleanTech Lithium appears to be bouncing from the base of a falling trend channel that has been in place since January. With the company having recently secured cash in the bank, the technical picture has a little more breathing room. The target is a return towards the top of the falling channel at around 7.75p by the end of next month. The preferred condition is simple: no fresh break below the 5p zone.
- DFS Furniture: An unusually strong chart: DFS Furniture is not a regular feature, but the chart is hard to resist. The shares have bounced above a rising 50-day moving average and remain within a rising channel from the May lows. The minimum upside target is 154p, where the 200-day average and the top of the rising channel converge. The setup remains positive while the price holds above channel-floor support around 134p.
- EnQuest: Recent resistance gives way: EnQuest has broken through recent resistance at 24p. The next target is the top of the rising channel around 30p, potentially by the end of next month or sooner. The chart has held above its 50-day average since the middle of the previous month, following a gap higher that has not been filled. Add repeated RSI rebounds from 50 and the result is a notably strong-looking technical situation.
- Itaconix: Above 145p, looking towards 168p: Itaconix finally managed to clear the 145p target after falling just short beforehand. With that level overcome, the next objective is 168p, which corresponds to the area of initial 2025 resistance. This remains one of the cleaner charting situations in the list. Above 145p, the bias is towards 168p.
- ImmuPharma: Key reversal above the 50-day average: ImmuPharma looks as if it may be ready to move after holding the base of a rising trend channel that has been in place since April. Thursday produced a very strong session, opening at the low and closing at the high, followed by a break above the rising 50-day moving average at around 4.2p. That is a classic key reversal to the upside. The minimum target is 5.7p by the end of the month.
- Mercantile Ports: A range recovery setup: Mercantile Ports has been stuck in a broad range between roughly 1.1p and 2.4p. The current technical proposition is for a return towards the upper end of that range at 2.4p by the end of next month, possibly sooner. The setup remains constructive while the shares stay above recently broken resistance at 1.44p.
- Novacyt: Taking up the slack after the May spike: Novacyt remains volatile, but the chart is beginning to look ready for another move. The shares are absorbing the pullback from the sharp May spike and are now back above recently broken resistance at 38p. The initial target is at least a retest of the late-May peak around 45p. Given the history of sharp moves here, it is a chart where support and position management matter especially keenly.
- Orcadian Energy: Above 18p, 30p comes into play: Orcadian delivered an impressive move after rapidly exceeding an ambitious 18p target. The next chart objective is the October resistance-line projection at 30p, possibly by the end of next month and potentially sooner if momentum persists. The upside case remains valid while the shares hold above 18p, or at least above the nearby 17p support area.
- Revolution Beauty: Poised near 5.25p: Revolution Beauty has been inching higher and is now testing a target line around 5.25p. The next aim is a retest of June resistance near 6.1p, ideally by the end of the month or otherwise by the end of next month. The chart is encouraging because the shares have been finding support at and above both the rising 50-day and 200-day moving averages. It looks as though it could pop at any point.
- Robert Walters: Bull flag breakout potential: Robert Walters has the look of a proper bull flag. A break through 105p would point to 135p by the end of next month, perhaps earlier. The shares are consolidating above a rising 50-day moving average, repeatedly finding support there. The RSI has also rebounded from above 50. That is the sort of combination worth taking seriously.
- Renalytix: Consolidation above the rising 50-day line: Renalytix has touched the base of a rising trend channel near 3p and then delivered a key reversal to the upside on Friday. The target is 4.1p by the end of next month. The main attraction is the lengthy consolidation above a rising 50-day moving average. It has spent at least a month building a base, and Friday may have been the early movement before a more meaningful upside break. The bullish case remains valid above 2.66p, which was Thursday’s support.
- Serica Energy: Holding the 200-Day Average: Serica has had a couple of gap-downs during June followed by a gap higher this month. The important technical requirement is to remain above the 200-day moving average near 226p. Above that level, the chart points towards resistance around 264p by the end of next month. The RSI has also broken major resistance around its neutral 50 level, adding weight to the positive case.
- The Works: A Punchy Chart with 96p in Sight: The Works has reached its second target at 78p, following an earlier target of 56p. Above 78p, the chart points towards an admittedly obscure five-year resistance-line projection at 96p by the end of next month. It is a punchy target, but it is also a punchy chart. The preferred risk point is below 70p, giving the setup a reasonably defined level at which the upside case would need reassessment.
Key Levels to Keep in Focus
- FTSE 100: 10,620 breakout level, 10,750 upside target, 10,400 support.
- DAX: 24,800 50-day average, 24,400 200-day average, 25,400 initial upside objective.
- Dow: 52,000 support, 53,300 resistance, 51,200 downside level if support fails.
- Bitcoin: $61,000 support and $67,000 resistance.
- Ethereum: 50-day support near $1,737 and $1,975 initial target.
- Gold: 3,850 to 4,055 range remains the likely near-term framework.
- WTI Crude: $78 support, $81 breakout trigger, then $83 and potentially $86.
The strongest charts are generally the ones doing the same three things: holding above a rising 50-day moving average, respecting trend-channel support, and producing RSI bounces above 50. Where those signals are absent, the emphasis should remain on the range boundaries and the levels that would invalidate the bullish case.
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.
