UP 107% in 3 months! Here’s what charts say about Delta Lithium's (ASX DLI) near-term direction

Highlights

• Delta Lithium Limited explores, evaluates, and develops gold and other metals, primarily in Western Australia
• The DLI shares have been on a bull run since April this year
• In the last three days, DLI shares have gained nearly 14%

Delta Lithium Limited (ASX:DLI) shares ended 1.36% higher at AUD 0.745 per share on Friday (16 June 2023), extending their gaining streak to the third straight day. The 3-day rally, which pushed DLI shares nearly 14% higher, was triggered by multiple announcements by the company, with the most important being Idemitsu Australia's investment in the lithium developer.

As per the announcement on 14 June 2023, Idemitsu Australia, a subsidiary of Japanese petroleum giant Idemitsu Kosan, acquired 65.6 million paid-up shares in the company at AUD 0.7075 per share, an 8% premium to the closing price of DLI on 13 June 2023. Following this deal, Idemitsu's stake in Delta Lithium will increase to 15%.

As part of the deal, both companies entered into a strategic cooperation agreement, which will allow DLI to benefit from the Japanese petroleum giant's technical expertise.

The proceeds from this fundraise will help fund the exploration and drilling activities at Delta’s Yinnetharra lithium project. This will also help upgrade infrastructure and feasibility studies at the Mt Ida Lithium project and help fund the exportation of materials from the projects.

In another announcement, DLI said twelve drill rigs were spinning at both Yinnetharra and Mt Ida, and the company had completed 205 holes for 47,501 metres at Yinnetharra and 338 holes for 61,514 metres at Mt Ida.

Worth mentioning here is that Delta Lithium shares have been on an upward trend since April this year, and in the previous three months through 16 June 2023, DLI shares have appreciated nearly 107%. Given below is a study of the price chart of DLI to assess the possible near-term movement of the stock.

DLI’s Technical Analysis:

DLI shares are experiencing a short-term rally, evident from higher highs and higher lows shown on the chart below. Prices are consolidating above a downward-sloping trend line, indicating the possibility of further upside from hereon. Furthermore, RSI (14-period) is trending upwards, with a level above 60, supporting the positive bias. The stock is sustaining above the 21-period SMA and 50-period SMA, which can act as support levels in case of any correction. Important support for the stock is placed at AUD 0.645, while on the upside, the stock may face resistance is AUD 0.820.

Daily Technical Chart – DLI

The technical levels for the stock were evaluated as per the closing price of AUD 0.745 per share, up 1.360%, as on 16 June 2023.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Technical Indicators Defined:

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock, and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period, prices are currently in a bullish trend (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 50-period, prices are currently in a bullish trend (Vice – Versa).

The Orange/ Yellow colour line represents the Trendline.

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period), which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status, while a reading of 30 or below suggests an oversold status.

Disclaimer

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