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, Acceso, Beowulf, Defence Holdings, Delta Gold, First Class, Forgent, Galileo, Gfinity, Helium One, Image Scan, Marechale, Poolbeg, Prospex, Silver Bullet, Xtract.
Markets finished the week with a rather uneasy feel. A few charts are still holding key support, but plenty of others are starting to look tired, and in some cases, the rug has been pulled quite sharply. That makes this a useful point to separate the setups that are simply consolidating from the ones that may be rolling over.
What follows is a charting sweep across the main indices, crypto, commodities, and a selection of small caps that are showing either notable momentum or important technical turning points.
As always, do your own research and treat these as chart-based observations rather than hard recommendations.
Major indices
FTSE 100
The FTSE 100 actually ended Friday in decent shape, sitting close to the rising 50 day moving average at 10,368. Even so, the broader tone was weakened by what happened later in the US, and that leaves the index trapped inside a range that is becoming increasingly important.
The upper boundary is the March resistance line near 10,480. The lower boundary is the floor of the rising trend channel from October, around 10,230. For now, that is the box to watch.
The concern is that the RSI is below the neutral 50 level, which tilts the picture slightly negative. If the lower end of the channel gives way, the next support comes in near 10,140. In a more bearish scenario, there could even be a retreat towards the 200 day moving average near 9,965, which was tested back in March.
To improve the outlook, the FTSE needs an end of day close above that March resistance line. Until then, this remains more of a containment pattern than a launchpad.
DAX
The DAX has been wrestling with resistance around 25,000, which ties in with the January trend line. There was a brief move above broken January resistance, but the market has not managed to build on it and has drifted back into the same barrier.
Earlier attention had been on the 24,600 to 24,700 area, which marked the floor of the rising trend channel from March. There was also the promise of a golden cross between the 50 day and 200 day moving averages, but so far that signal has not delivered much beyond a bounce in the middle of last month.
The modest positive here is momentum. The RSI is still just above 50, at around 51, which suggests the bulls have not entirely lost control. But this remains a market that needs a firmer break higher to look convincing.
Dow Jones
The Dow turned rather messy on Friday, and the price action leading into that drop is worth noting. This has been one of those classic choppy tops where the market alternates up and down days in a way that tends to frustrate both sides.
After making highs on 2 June, it looked as if a top had formed when support started to give way. Then a fresh high was pushed through on Thursday, only for the market to tumble on Friday. That sort of sequence often appears when a market is trying to shake out as many shorts as possible before a larger decline begins.
Immediate support sits around 50,500. If that breaks, the next key area is the 50 day moving average near 49,000, which also acted as support in mid May.
Crypto charts
Bitcoin
Bitcoin had a worse week than the Dow. There was a bear trap rebound after a move below the old February support at 60,000, and that at least opens the door to the idea that the worst may already be priced in.
That said, the chart still needs repair. Initial resistance is at 65,000, and getting back above that level is the first real clue that the market has stabilised. Until then, downside risk remains alive.
The bearish chart target, if things deteriorate again, is the floor of the falling trend channel in place since last July, which points as low as 42,000. That is clearly not the preferred outcome, but it is the main technical danger zone.
One point in Bitcoin’s favour is momentum. The RSI fell into the mid to upper teens on Friday, roughly the same oversold condition seen back in February. On previous occasions, that kind of reading has marked a floor. It may do so again over the next few sessions.
Ethereum
Ethereum was also hit hard. After losing the old support zone around 1,716, the market entered oversold territory and now looks vulnerable to another test of that area.
As with Bitcoin, the broader chart is dominated by a falling trend channel that has been in force since July. Unless Ethereum can recover above the 1,750 to 1,760 region, there is a real risk of a move towards 1,000, potentially by the end of next month.
The key reference point is the February low at 1,753. If the price cannot reclaim that zone decisively, the downtrend remains the dominant force.
Commodities
Gold
Gold has also taken a knock. The main issue is the break well below the 200 day moving average, which sits near 4,428 on this chart basis. Once a market starts spending meaningful time under that kind of long term average, the probability of a deeper decline rises.
The next major area on the downside appears to be around 3,800, which lines up with the lower edge of the channel structure. That would be quite a rude awakening for committed gold bulls.
Momentum has been flashing caution for some time. Since the middle of last month, the RSI has repeatedly failed beneath the 50 level, a sign that upside energy was fading before the price finally cracked.
WTI crude oil
Crude oil may also be losing momentum, but unlike gold it is currently sitting near support. The first key level is 88 dollars, which acted as support during May.
If that fails, the next target becomes the floor of the falling trend channel near 83 dollars. On the upside, the best resistance area is around 97.50, where the 50 day moving average meets the upper boundary of the falling trend channel from late March and April.
In other words, oil still has room to bounce, but the burden of proof is now on the buyers.
Final chart take
The broader market picture is mixed to soft. The FTSE and DAX are still clinging to support structures, but neither looks especially comfortable. The Dow’s whippy top action is a warning sign, while Bitcoin, Ethereum and gold all need to recover key levels quickly to avoid deeper technical damage.
At the stock level, the opportunities are more selective. A handful of names such as First Class Metals, Forgent, Poolbeg, Silver Bullet and Xtract still offer constructive setups, provided support levels continue to hold. In this sort of environment, chart discipline matters more than ever.
Key theme for the week ahead: watch the support levels closely. In several major markets, they are now doing a lot of heavy lifting.
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.
