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, Gold, Distil, GS Chain, Gem Resources, Kazera, KRM22, Litigation Capital, SolGold, Tiger Royalties, Vaultz, and Naked Wines.
Major Indices: Navigating Resistance and Support Levels
FTSE 100: Watching the Rising Wedge
The FTSE 100 currently displays a potential rising wedge pattern dating back to May, with the upper boundary near 9,250 points acting as a target by the end of this month. After recent price action testing the wedge’s floor around 9,030, closing below this June uptrend line on an end-of-day basis could trigger a pullback towards the 50-day moving average at 8,880. However, staying above 9,030 keeps the door open for the extended bull run we’ve enjoyed since early April.
DAX: A Challenging Outlook
The DAX has experienced a gap down through the 50-day moving average, a bearish signal that often signals further weakness. The next support zone appears to be around 23,000 points, dropping from the previously hoped-for 23,500 resistance turned support level from March. The relative strength index (RSI) has tumbled to 38, reinforcing the likelihood of a move down to this new target. A rebound would require an end-of-day close back above the 50-day line, which itself is trending downward, suggesting caution.
Dow Jones: Tariff-Related Turmoil
The Dow has been the primary culprit behind recent market volatility, largely due to tariff concerns. It gapped down through the bottom of its recent range, touching the 50-day moving average near 43,400 points, which served as a worst-case scenario target. The market managed to close above this level, but risks remain, including a potential drop to the rising trend channel floor around 42,500 before the selloff concludes. Repeated failures at the 45,000 mark have delayed any hopes of reaching 47,000+ by month-end.
Cryptocurrency Update: Bitcoin and Ethereum
Bitcoin: Holding at Key Support
In risk-off environments, cryptocurrencies often take a hit, but Bitcoin has bounced well around the 11,200 level—its old May peak and current 50-day moving average. An uptrend line from April also supports this bounce. The RSI remains below the neutral 50 mark at just under 46, indicating that for a fresh upside leg, traders will want to see the RSI break above 50 alongside continued positive price action. Aggressive traders might consider buying at this old resistance, hoping it becomes new support. The downside risk points toward 10,700 and the rising trend channel floor established in March.
Ethereum: Searching for Stability
Ethereum has struggled to keep pace with Bitcoin’s recovery, failing to break above the 4,000 level and recently gapping down from peaks above 3,700. The current support zone is hovering around the January resistance level near 3,350. One bright spot is Ethereum’s RSI rebounding off the neutral 50 level, which some interpret as a sign that the worst may be behind us. Earlier projections aimed for a rise to 4,300–4,400 by month-end, contingent on a swift push through 4,000 early in August.
Gold: Potential Bear Trap or New Rally?
Gold is currently testing the floor of its rising trend channel from April, with a slight overshoot to the downside but now back comfortably within the channel. The RSI has climbed back above neutral 50, and the price is above the 50-day moving average, suggesting a potential bear trap. The best-case scenario sees gold reaching as high as 3,800 by the end of the month, aligning with the top of the trend channel. However, the immediate challenge is breaking through the resistance around 3,430, which has been tested multiple times. Should this fail, a sustained drop below 3,200 would be concerning.
Stock Spotlight: Rising Trends and Potential Breakouts
Distill: Riding a Rising Trend Channel
Distill has formed a rising trend channel base and found solid support above the 200-day moving average. The sharply rising 50-day line adds to the bullish outlook. As long as the price remains above the channel floor established in March, the target is reaching the top of the range near 0.35 pence by the end of next month.
GS Chain: Filling the Gap
Shares of GS Chain have bounced nicely, filling a previous gap to the upside during the week. The initial target is around 0.90 pence by month’s end, assuming the price holds above the gap floor.
Gem Resources: Signs of a Sharp Rebound
Gem Resources has broken a resistance line from January and is consolidating above a rising 50-day line near recent lows—often a sign of a sharp rebound. The 200-day moving average at 0.47 pence is the next key target, provided the stock remains above 0.20 pence and the 50-day average. The RSI has rebounded significantly from neutral 50, a leading indicator for potential upside momentum.
Kazera Global: Ready to Break Higher
Kazera remains in a rising trend channel since July last year, with the top of the channel near 2.5 pence as a target by month-end. Recent strong candle patterns and an unfilled gap to the upside, combined with price action above both the 50-day and 200-day moving averages, suggest the stock is poised for a move upward.
KRM22: A Hidden Gem
KRM22 has flown under the radar but shows the beginnings of a rising trend channel base. The top of this channel is around 70 pence, expected by the end of next month. Support is likely to hold near the May resistance level of 36 pence and the 50-day moving average, both around the same price point.
Litigation Capital: Forming a Bullish Base
Although still near the bottom, Litigation Capital showed promising signs with a hammer candle on Thursday followed by a strong bullish candle on Friday. The stock looks set for further gains beyond 30 pence. Key support lies around the gap floor at 35 pence, while the top of the rising trend channel base at 51 pence represents a longer-term target.
SolGold: Approaching Key Targets
SolGold is nearing its second target of approximately 11.75 pence, with the top of the range at 13 pence as the next milestone. This is expected by the end of next month or potentially sooner.
Tiger Royalties: Waiting for a Clear Breakout
Tiger Royalties remains below the RSI 50 mark at 45 and under resistance near 1.9 pence from last month. A breakout above recent resistance around 2.1 pence would set the stage for a retest of June highs near 5 pence. Maintaining support above the 200-day line at 1.3 pence is crucial.
Vaultz Capital: Breaking Resistance
Vaultz Capital has broken through recent neckline resistance at 9 pence following a fundraise, signaling a potential turnaround. The minimum upside target is 13 pence, with a best-case scenario of 27 pence by month-end. The RSI is still below neutral 50 at 47, so traders may wait for confirmation above this level.
Virgin Wines UK: Gaining Momentum
Though not usually covered, Virgin Wines has seen a gap up on Thursday and followed through on Friday, showing sufficient strength to target 80 pence. The stock remains comfortably above the 50-day moving average at 61 pence, supported by positive trading updates that beat market consensus.
Conclusion: Navigating a Mixed Market Landscape
The current market environment is characterized by cautious optimism, with some indices and cryptos holding key support levels while others face downward pressure. Technical indicators such as trend channels, moving averages, and RSI levels provide valuable guidance for anticipating potential moves. Selected stocks in the bulletin board space are showing promising setups, offering potential opportunities for traders willing to engage with emerging trends.
Staying informed on these technical developments can help investors and traders position themselves effectively as the market unfolds through August. Keep an eye on critical support and resistance levels, momentum indicators, and volume signals to navigate this dynamic landscape.
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.
