Lithium On Watch

Technicals | May 23 2019

Bottom Line 22/05/19

Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Down
Support Levels: 25.72 / 22.81
Resistance Levels: 27.55 / 29.62 / 30.56

Technical Discussion

The Global X Lithium & Battery Tech ETF (LIT) is a comprehensive and well rounded ETF that invests in the total lithium cycle. Right from the beginning of the supply chain at the mining level, through to refining and battery production. It commenced trading in July 2010 and its primary exchange is the NYSE Arca. The advantages of this ETF is that it provides access to a broad basket of companies aligned to the Lithium sector. Lithium is commonly known for its use in lithium batteries yet it is also in high demand in relation to manufacturing heat resistant glass and ceramics. Yet it's the projected widespread adoption of lithium batteries in emerging technologies that has most investors interested at the moment. Top producers globally include Australia, South America (Chile & Argentina in particular) and also China. 

Reasons to be cautious (watching for potential recovery) 
? A key resource required in the emerging technology sector
? Limited producers globally yet growing
? Europe and China seen as major consumers moving forward 
? January 2018 high readjusted to being a higher degree Wave-(1) high

'In Elliott Wave speak, Wave-(2)'s typically retrace into the 50.0% - 61.8% pullback area which in this case aligns 27.92 and 24.79 respectively. Thus far price has tagged a low of 25.72 so it was no real surprise to see buyers start to have a nibble again when this price zone was entered into.' Well since our last review the upside move that was trying to establish has failed miserably with price quickly heading back down towards major support at 25.72. In fact it has traveled slightly lower to 25.20 via a gap lower move two sessions ago. It's not a great look and it's really important now for  major support to hold otherwise price action will head into full blown bearish mode. Last night we saw that gap filled with price closing towards the sessions highs rather than rejecting.

So this is a positive although it is only very early days.


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