ChartWatch: Top 10 ASX lithium stocks, Pilbara Minerals, Core Lithium, Sayona, & more

This ChartWatch is Part 2 of a technical analysis review of lithium prices and ASX lithium stocks. You can read Part 1 here.

In Part 1, I asked you to tell me every ASX lithium stock chart you wanted me to analyse. Well, lithium lovers, here they are! I will do them in order of popularity, starting with the most popular. You gave twenty in total, so I will keep the analysis brief and split the bunch into the Top 10 today and the rest tomorrow.

In each case, I’ll point out my favourite technical indicators which help me determine whether there’s more likely to be excess demand or excess supply in the system for a stock:

1. Short Term (“ST”) & Long Term (“LT”) trends (⬆️/⬆️ is associated with excess demand)

• ST: 21-34 EMAs = Light green ribbon for ST uptrend vs light pink ribbon for ST downtrend

• LT: 144-233 EMAs = Dark green ribbon for LT uptrend vs dark pink ribbon for LT downtrend

2. Price action

• 📈 Higher peaks and higher troughs = Decreasing supply & increasing demand

• 📉 Lower peaks and lower troughs = Increasing supply & decreasing demand

3. Candles

• Demand-side = White candles and/or downward pointing shadows

• Supply-side = Black candles and/or upward pointing shadows

4. Point of Demand (“POD”) / Point of Supply (“POS”)

• POD = Key price point where I expect excess demand to assert an influence on price (i.e., “Support”)

• POS = Key price point where I expect excess supply to assert an influence on price (i.e., “Resistance”)

Ultimately, the goal of good technical analysis is to use a balance of evidence approach to determine which stocks are demonstrating the strongest traits of excess demand for potential investing opportunities, and those which aren’t to avoid. Let’s get stuck in!

1. Pilbara Minerals (ASX: PLS)

ST/LT Trends:⬇️/⬇️

Price action:⬆️Peaks/⬇️Troughs

Candles: Mostly demand-side since 6 Dec, mostly supply-side since August

POD/POS: POD 6 Dec low @ $3.10 vs POS 15 Nov high @ $3.82

Commentary: Impressive candles on moderately elevated volume on 6 & 7 Dec indicates likely short covering. However, evidence of positional buying remains scant so far. A close above the POS @ $3.82 would change the price action back to higher peaks and higher troughs, it would also likely neutralise the ST downtrend. Watch for further demand-side candles above $3.38 to confirm ST trend change. Longer term, I prefer to see the price close above the LT trend ribbon (approx. $4.15) to be sufficiently confident the prevailing LT downtrend has ended.

2. Sayona Mining (ASX: SYA)

ST/LT Trends:⬇️/⬇️

Price action:⬇️Peaks/⬇️Troughs 📉

Candles: Mostly supply side

POD/POS: POD 5 Dec low @ $0.051 vs POS1 11 Dec High @ $0.064, POS2 1 Nov low @ $0.075

Commentary: The word “trainwreck” comes to mind! A picture of excess supply since July, but also of a clear lack of excess demand since September 2022. I can see some excess demand creeping in via candles from the POD @ $0.051, but yesterday’s supply-side candle shows supply remains very active. A close above POS1 @ $0.064 is crucial to confirm diminishing supply, but preferably above POS2 @ $0.075 for greater confidence the ST trend is changing to up. Longer term, so much needs to happen here, at least a close above the LT trend ribbon around $0.135 to be sufficiently confident the prevailing LT downtrend has ended.

3. Core Lithium (ASX: CXO)

ST/LT Trends: ⬇️/⬇️

Price action:⬇️Peaks/⬇️Troughs 📉

Candles: Mostly supply side

POD/POS: POD 6 Dec low @ $0.225 vs POS1 11 Dec High @ $0.280, POS2 27 Sep low @ $0.330

Commentary: (I’ll be honest with you, I just copied and pasted the analysis from Sayona and changed a few numbers! This does demonstrate, however, just how consistent and unemotional technical analysis can be!) A picture of excess supply since July, but also of a clear lack of excess demand since November 2022. I can see a sliver of excess demand creeping in via the candle on 6 Dec, but yesterday’s supply-side candle shows the supply remains very active. A close above POS1 @ $0.280 is crucial to confirm diminishing supply, but preferably above POS2 @ $0.330 for greater confidence the ST trend is changing to up. Longer term, so much needs to happen here, at least a close above the LT trend ribbon around $0.650 to be sufficiently confident the prevailing LT downtrend has ended.

4. Allkem (ASX: AKE)

ST/LT Trends:⬇️/⬇️

Price action: ⬆️Peaks/⬇️Troughs

Candles: Mostly demand-side since 6 Dec, mostly supply-side since August

POD/POS: POD 6 Dec low @ $8.05 vs POS 11 Dec high @ $9.70

Commentary: It’s so interesting how some of these charts have played out. Where SYA and CXO are very similar in their price action, so too are Allkem and PLS – at least since the December bounce. Impressive candles on elevated volume on 6, 7 & 8 Dec beats PLS’s bounce, and it smacks of short covering and perhaps even some positional buying. A close above the POS @ $9.70 would change the price action back to higher peaks and higher troughs, it would also likely neutralise the ST downtrend. Watch for further demand-side candles above $8.86 to confirm the ST trend change. Longer term, I prefer to see the price close above the LT trend ribbon (approx. $12) to be sufficiently confident the prevailing LT downtrend has ended.

5. Latin Resources (ASX: LRS)

ST/LT Trends: ⬇️/➡️

Price action:⬆️Peaks/⬆️Troughs 📈

Candles: Mostly demand-side since 5 Dec, mostly supply-side since August

POD/POS: POD 28 Nov low @ $0.165 vs POS1 8 Dec high @ $0.25, POS2 7 Nov high @ $0.280

Commentary: Another chart more in the PLS and AKE vein – as in, a really credible bounce since the December low. In fact, Latin Resources notched what I would call a major POS (“MPOS”) @ $0.165, none of the others have done this so far. The most impressive feature of this chart for me is the massive demand-side candle on 8 Dec. It was accompanied by good, but not totally convincing, volume. Still, I’d say that as long as the price continues to trade above that candle’s low of $0.185, there’s a very good chance the ST downtrend is changing. Further evidence in terms of demand-side candles and a close above POS1 to confirm higher peaks and higher troughs would also be welcome. Such an event would also close the price above the LT trend ribbon – which is a major tick for re-establishing a LT uptrend.

6. Argosy Minerals (ASX: AGY)

ST/LT Trends: ⬇️/⬇️

Price action: ⬇️Peaks/⬇️Troughs 📉

Candles: Mostly supply side

POD/POS: POS 28 Nov high @ $0.210

Commentary: Wow! What a great tour through demand and supply commitment in the ASX lithium sector so far! Do you notice anything different about this one? Unlike the others, no bounce! So, I’m going to say with confidence that it’s the worst chart we’ve seen so far. Argosy’s chart has very few, if any redeeming features in terms of exhibiting excess demand. On the contrary, trends, price action, and candles are consistent with high conviction excess supply. What can change things around for Argosy? The opposite of what you see right now – you’d want to observe rising trend ribbons, higher peaks and higher troughs, and demand-side candles. It really can be this simple if you let it!

7. IGO (ASX: IGO)

ST/LT Trends:⬇️/⬇️

Price action:⬇️Peaks/⬇️Troughs 📉

Candles: Mostly demand-side since 6 Dec, mostly supply-side since September

POD/POS: POD 6 Dec low @ $7.43 vs POS1 8 Dec High @ $8.31, POS2 1 Dec high @ $8.75

Commentary: I note two decent candles on 6 & 7 Dec, but there’s very little to get excited about after that. I challenge you to rank each stock in this list in terms of its December bounce. The bigger the bounce, the greater the excess demand (Why? Short covering, positional buying, perceptions of value etc.). The smaller the bounce, the less motivated the demand side was to take on the risk of owning the stock, and the more motivated the supply side was to take advantage of the bounce (fearing they may not get a better opportunity to bail out!). This doesn’t feel like a great bounce here on IGO – but a close above the POS @ $8.31 would change the price action back to higher peaks and higher troughs, which may give holders some hope the worst is over.

8. Liontown Resources (ASX: LTR)

ST/LT Trends:⬇️/⬇️

Price action:⬆️Peaks/⬇️Troughs

Candles: Mostly demand-side since 6 Dec, mostly supply-side since October

POD/POS: POD 6 Dec low @ $1.215 vs POS 11 Dec High @ $1.420

Commentary: A reasonable bounce since the December low, but I do note very little conviction in the volume – possibly the least we’ve seen so far. I would prefer to see a burst of volume corresponding with one or two clear demand-side candles, preferably closing above the POS @ $1.420. This would also establish higher peaks and higher troughs. The biggest thing working against Liontown is the consistency of the supply side candles after its takeover bid fell through. It’s clear how convinced the supply side was they needed to get out, and how feeble the demand side was in stepping up to the plate to halt the decline. The market is always speaking to you through the candles, you just have to listen!

9. Wildcat Resources (ASX: WC8)

ST/LT Trends:⬇️/⬆️

Price action:⬇️Peaks/⬇️Troughs 📉

Candles: Mostly supply-side since November

POD/POS: POD 6 Dec low @ $0.640 vs POS 11 Dec High @ $0.770

Commentary: The only LT uptrend in this list – which deserves some credit in itself! However, the ST trend has rolled down, and the price action is lower peaks and lower troughs – evidence of excess supply in the ST. I like the demand-side candle logged on 9 Dec, but it lacks conviction as evidenced by the low volume. A close above the POS @ $0.770 would switch the price action back to higher peaks and higher troughs, and if accompanied by strong demand-side candles and volume, would be a good signal short term excess demand has returned. A close below the POD @ $0.64 would confirm the environment is convincingly one of excess supply.

10. Piedmont Lithium Inc (ASX: PLL)

ST/LT Trends:⬇️/⬇️

Price action:⬇️Peaks/⬇️Troughs 📉

Candles: Mostly supply side

POD/POS: POD 6 Dec low @ $0.355 vs POS 11 Dec high @ $0.400

Commentary: The second worst chart (after AGY) in terms of demonstrating a lack of excess demand and continued excess supply. Very few redeeming features here: ST & LT trends, price action, and candles are each still clearly showing a feeble demand-side and a motivated supply side. A close above the POS @ $0.400 is the minimum requirement to signal the prevailing ST downtrend might be changing, and a close above the LT trend ribbon around $$0.670 is required to suggest the LT downtrend might be changing.