Why is the Piedmont Lithium share price plunging 10% today?

The Piedmont Lithium Inc (ASX: PLL) share price is crashing back down to earth after rocketing 85% in the past month.

At the time of writing, shares in the Australian lithium miner are down 10% to 81 cents.

Despite the heavy fall, its shares are still up 48% in a month.

Let’s look at what could be driving the fall in the company’s share price.

What’s happened to Piedmont shares?

Investors are offloading Piedmont shares in droves following a mixed session across the lithium space.

Shares in Sayona Mining Ltd (ASX: SYA) and Lake Resources NL (ASX: LKE) are up 2.78% and 1.65%, respectively.

However, other lithium shares such as Global Lithium Resources Ltd (ASX: GL1) and Li-S Energy Ltd (ASX: LIS) are down 6.56% and 5.39%, respectively.

Piedmont hasn’t reported anything today that would explain why its shares have fallen so sharply.

However, given the sudden acceleration in the past month, there were a few indicators that its shares were overbought.

For example, the relative strength index (RSI) touched 82 on 17 August – just before sellers swung into action.

The RSI is a momentum oscillator that is used to assess the strength or weakness of a share price. Normal levels range between 30 and 70, but anything outside this tells us if the share price is cheap or expensive.

Furthermore, the Piedmont share price was outside the Bollinger Bands. This works well in conjunction with the RSI, which gives oversold or overbought signals of the share.

Piedmont share price summary

Despite the recent fall, the Piedmont share price is up 10% in 2022.

When looking at the longer term, the company’s shares are ahead by 18% over the past 12 months.

For context, the S&P/ASX 200 Index (ASX: XJO) has tumbled 5% in 2022, and since this time last year.

Based on today’s price, Piedmont presides a market capitalisation of roughly $474.81 million.

The post Why is the Piedmont Lithium share price plunging 10% today? appeared first on The Motley Fool Australia.

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More reading

• Why are ASX lithium shares having such a cracking start to the week?
• Why is the Piedmont Lithium share price rocketing 15% on Monday?
• Why is the Piedmont Lithium share price off to such a great start in August?
• Why are ASX lithium shares having such a top run on Wednesday?
• Why is the Piedmont Lithium share price piling on 6% today?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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