AUS
NZ
UK
CA
USA
IND
Mining company, Hot Chili Limited (ASX: HCH) is one of the latest hot stock on the ASX which is making headlines from the past few days. The stock has been thus, under the radar by ASX on price related query and has been so far unable to reason out the trend in the trading of its securities. On the other hand, it was just a few days back only when the company announced about its transformation strategy through the acquisition of a key copper-gold discovery, Cortadera, which is located near its flagship Productora copper deposit.
Some of the investors may not be willing to buy this penny stock now considering the past performance wherein it has only given pain to the investors. But the fact is this stock has more than doubled in a few trading sessions and doesn't seem to be in a hurry to take a halt.
The Stock has fallen continuously from A$0.80 odd levels in 2010 to the low of $0.009 which has been made this year. During the correction, every rally from the bottom was being sold off by the investors who held it from even higher levels, making a continuous pressure on the supply side. This has been done consistently, and every attempt to rise had failed, taking the stock to newer bottoms. After this continuous downtrend of lower highs and lower lows has been noticed.
Near the bottom level, the shares have been trading in a higher than average quantity which was evident in the volume spikes seen on the volume chart. This was the first indication of something interesting happening in the company which resulted in a massive increase in the volume transactions. Post that, the stock started to move on the upside with tremendous momentum. With the increasing momentum, a greater number of buyers started to punt on and catch the momentum which created a spiral effect resulting in an even further increase in the volume and price.
As of 21st February 2019, the stock rose by more than astonishing 34% (to about $ 0.031) with an eye-opening volume of 10.4 million in a single day. To give a perspective, it is the highest single-day volume in the past ten years. In technical parlance whenever a price change takes place with the increasing volume, it is said to be a qualitative and sustainable price change. However, speculative stocks in small-cap arena may not follow the trend always.
Another indication of the typically expected trend is being noticed at the bottom of the price chart. When the price bottomed out around A$0.009 and started to move up, it had already created a bullish divergence with the Relative Strength Index (RSI). A bullish divergence is a specific form of price action wherein the price and the indicator generally do not follow the same path. In this case, the stock made a new price low at A$0.009 by breaking the previous low of $A0.028, but the respective indicator (RSI) fails to follow the same path of making a new low. This is called bullish divergence, and it is more reliable if formed at the bottom of any trend which happened in the case of HCH.
The stock seems to have formed a strong base at the bottom and has already started to move higher with strong momentum. The strength of the momentum and increase in the demand looks healthy that has taken the stock to its highest price of nine months in just a few weeks. There is a zone around A$0.04 where the stock face some resistance. Once this gets breached, we may see more upside. However, here the interplay of operational performance and other growth catalyst will come into picture.
Disclaimer
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
