Technical Outlook on Aussie Lithium Players: PLS, GXY, ORE, GLN

Technical Outlook on Aussie Lithium Players: PLS, GXY, ORE, GLN

Lithium prices have plunged since the beginning of the year 2019, which in turn, dragged the share price of the lithium operators drastically. The market is currently oversupplied, however the demand for lithium is expected to see a up surge in the coming years due to the increase in demand for electric vehicles and increased feasibility of the EV technology.

It is said that the fundamental news moves the share prices, however the overall mood of the market could be analysed using the tools of technical analysis.

Technical analysis enables the analysts to understand the underlying mood of the market participants and help in uncovering the probable future price actions.

Let’s pull out the price charts of few of the prominent lithium players within the Australian market and study the price action, wearing the hat of a chartist.

Pilbara Minerals Limited (ASX: PLS)

Pilbara Minerals is an Australian Securities Exchange listed Lithium and Tantalum explorer and producer, with a significant Pilgangoora Project under the business portfolio of the company.

The share price rallied from the level of approx. A$0.350 (Day’s low on 29th August 2017) to the level of A$1.250 (Day’s high on 20th December 2017).

Post making a high of A$1.250 the share price of the company moved in a continuous downtrend.

PLS Daily Chart (Source: Thomson Reuters)

The downtrend movement is shown on the chart with a red downward sloping line. On carefully observing the daily chart we can identify that the shares price actions caused the trio of 7,20,200-days exponential moving average to cross each other, with 7-days exponential moving average crossing the 20-days exponential moving average from above, and both 7 and 20-days exponential moving average crossing the 200-days exponential moving average from above.

The crossing of the 7,20,200-days trio marked a presence of a Death Cross (bearish signal), and the price further fell post the emergence of the cross on the daily chart.

The price retracted more than 61.8 per cent from the initial rally point before hovering to the present level of A$0.680 (Day’s close on 5 June 2019).

 PLS Daily Chart (Source: Thomson Reuters)

On further analysing the daily chart of the company it can be seen that the share price is moving within a wide range of Bollinger band, and the price is taking hurdle of the median of the Bollinger band, which consists of 20-days simple moving average (purple line within two green lines).

The share price of the company is also marking a declining volume on a daily chart with high volatility characterised by the large width of the Bollinger band and the rising average true range (ATR) of 14-days period.

The sudden spike in the price on 29th March 2019 with a hike in volume broke the upper band of the Bollinger band, which in turn, caused the Bollinger band to widen the gap between the upper and lower band.

However, the sudden spike on the share price followed by a downside and recovery gave us perfect coordinates to connect the Fibonacci series, the points of connection are marked as 0, 1, 2 on the chart shown above.

The connection of these three points with Fibonacci gave us the results, which are:

23.6 per cent value of the Fibonacci series is at A$0.7703, 38.2 per cent value of the Fibonacci series is at A$0.7279, 50.0 per cent value of the Fibonacci series is at A$0.6937, 61.8 per cent value of the Fibonacci series is at A$0.6595, where the price is currently hovering, and the 100.0 per cent value of the Fibonacci series is at A$0.5486.

Galaxy Resources Limited (ASX: GXY)

Galaxy Resources Ltd is a lithium concentrate producer, with the presence in Australia, Canada and Argentina. The company is mainly focused on producing battery chemicals such as lithium carbonate and lithium hydroxide, which currently serves as a significant component in energy storage batteries.

The share price rallied during the third quarter of the year 2015 from the level of A$0.135 (Day’s low on 23rd September 2015). The rally which started during the third quarter of the year 2015 halted around the level of approx. A$2.851 and corrected to the level of A$1.425 (Day’s low on 26th September 2016).

 GXY Daily Chart (Source: Thomson Reuters)

As can be seen on the chart shown above, post rising to the level of approx. A$2.581 the price corrected and rose again to the level of approx. A$3.494 from where it again corrected and moved in a wave motion to mark a top of approx. A$4.535.

After hitting the top of approx. A$4.535, the share price of the GXY moved in a continuous downtrend (or we can say in a corrective phase to the prior uptrend).

The price moved downward and corrected more than 61.8 per cent of the initial up-rally. The down trend was marked by the downward sloping trend line (Red line).

GXY Daily Chart (Source: Thomson Reuters)

On further analysing the daily chart, it can be seen that the price action revealed a Golden Cross (bullish signal) between the 20-days exponential moving average and 50-days exponential moving average (green upside arrow); however, post giving the golden cross the price soon took the hurdle of 200-days exponential moving average twice and dropped (red downside arrow).

Post experiencing the hurdle from the 200-days exponential moving average, the share price of the company marked the presence of Dead Cross (bearish signal) between the same 20 and 50-days exponential moving average and dropped on the charts to the present level of A$1.485 (Day’s close -05 June 2019).

Orocobre Limited (ASX: ORE)

Orocobre Limited is focused explicitly on Lithium and fertilizer component- potash with its Olaroz Lithium prospect and Borax Argentina S.A, which gives the company a portfolio of brine as well.

ORE Daily Chart (Source: Thomson Reuters)

The share price rallied from the level of A$2.629 (Day’s low on 15th March 2017) (rally point) to the top of approx. A$7.45, from where the share moved in a continuous downtrend. The stock has corrected more than 78.6 per cent of the initial rally.

ORE Daily Chart (Source: Thomson Reuters)

On further analysing the daily chart, it can be seen that the share price of the company is currently moving in a downtrend and has recently broken an upward sloping trendline (yellow line). Post breaching the support of the upward sloping trendline the price plunged further to the current level of A$3.150 (Day’s close- 05 June 2019).

The share price of the company is currently trading below its 50, 100, 200-days exponential moving averages, which are presently at A$3.393, A$3.489, and A$3.771, respectively. The 50-days exponential average is below 100-days exponential average, and 100-days exponential average is below the 200-days average.

Galan Lithium Limited (ASX: GLN)

Galan Lithium Limited is an Australian Securities Exchange listed lithium explorer, and the company holds interest in Hombre Muerto salar in Argentina, which comes under the lithium triangle, a significant prolific salt flat across the globe.

The share price rallied from the level of A$0.076 (Day’s low on 11th January 2018) to the top of A$0.680 (Day’s high on 4th March 2019), from where the shares of the company moved in a downtrend till the present level of A$0.240 (Day’s close 05 June 2019).

GLN Daily Chart (Source: Thomson Reuters)

The share price corrected by 78.6 per cent and the downtrend is witnessing a decline in volumes, as shown with a red line on the volume bar.

GLN Daily Chart (Source: Thomson Reuters)

On a daily chart, the price action unfolded 3 perfect points (0,1,2) to connect the Fibonacci series. The results of the Fibonacci series are as:

23.6 per cent value of the Fibonacci series is at A$0.315, 38.2 per cent value of the Fibonacci series is at A$0.249, 50.0 per cent value of the Fibonacci series is at A$0.195, 61.8 per cent value of the Fibonacci series is at A$0.142.


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