Fluence Corporation Limited (ASX: FLC) is in the business of decentralised water and wastewater treatment solutions and is targeting to become a global leader in this segment. Recently the stock has an unexpected rally on ASX, and therefore it has come under the radar of many investors.
On 24th December 2018, the stock plunged to its 2 years low level of A$0.29. This level was achieved by a single day fall of more than 10.6%. This sudden fall made the stock highly oversold as the Relative Strength Indicator (RSI) had shown the readings of 18.25 on the same day on a daily chart. Any value below 30 in RSI indicates the oversold condition for the stock and moreover, this was even below 20 which is rarely seen. To put it in perspective, the RSI has never shown the readings around 18 (on a daily chart) in the last seven years.
Clearly, the consequence of the oversold conditions worked and buying started to generate from the lower levels. The stock started to rise again, and on 7th January 2019 came out of the oversold zone, and since then it didn’t breach its two year low of A$0.29. After this, the prices got stabilised and moved in a range of A$0.39 – $0.31 for a couple of months.
On 14th March 2019, the company came out with an announcement that the Director Paul John Donnelly had acquired 500,000 Fully Paid Ordinary Shares for the average price of A$0.36 on 11th March 2019. This fundamental boost was taken very positively on the street, and the stock rallied 9.5% on the same day.
This was the initial start of the rally, and thereafter a series of major events and announcements by the company helped the stock to continue its momentum. On 18th March 2019, the company announced its commercial availability of its SUBRE solution in two configurations; as a retrofit upgrade and as a new greenfield plant. After this, on 20th March 2019, the company announced that it has received US$20 million through its joint venture to design and construct a 40,000 m3 /day seawater desalination plant. This helped the stock to open gap up on the same trading day and fuel the ongoing rally.
On 28th March 2019, the company announced another strategic collaboration agreement with ITEST. This was a bulk order from China to provide additional Aspiral™ Smart Packaged wastewater treatment plant. This news alone had the investors jumping on their toe, and consequently, the stock surged by a massive 17.7% in the same trading session.
All these events led to a consistent buying from the investors which led to a sharp rally in the stock price. The rally was so sharp that the stock closed at almost one year’s highest closing.
The prices are at relatively higher levels to make a new position. RSI on the daily chart has shown the readings of 67.18 (as of 5th April 2019) which is close to the overbought zone.
The stock’s closing price is A$0.53 as of 5th April 2019.
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