Piedmont Lithium Charges Higher Following Tesla Deal: What's Happening And What's Next?

Piedmont Lithium, Inc PLL was surging almost 15% at one point on Wednesday.

The spike higher came as a delayed reaction to the mining company’s Tuesday announcement that it had amended a supply agreement with Tesla, Inc TSLA, where Piedmont will supply the EV-giant with about 125,000 metric tons of spodumene concentrate (SC6) between the second half of 2023 and 2025.

In the original agreement, signed on Sept. 28, 2020, Piedmont was to begin supplying Tesla with SC6 starting between July 2022 and July 2023, which didn’t come to fruition.

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The partnership will provide Tesla with a reliable source of lithum hydroxide, with is an essential component of the batteries used in the company’s electric vehicles.

Prior to Piedmont’s original announcement, the stock was trading under the $11 mark, but on Sept. 28, 2020, Piedmont surged almost 400% to reach a high of $54.50. After a period of downward consolidation, Piedmont entered an uptrend, which eventually brought the stock to an all-time high of $88.97 on March 18, 2021.

Since reaching the all-time high, Piedmont has experienced many months of high volatility, whipsawing between about $32 and $80, with strong support at the $40 mark.

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The Piedmont Chart: On Dec. 28, Piedmont tested the $40 area as support and on the following day, the stock started to bounce up from the level. On Tuesday, selling pressure saw Piedmont fall toward $40 again, but buyers came in and bought the dip, which caused the stock to print a higher low and confirm the downtrend is over.

• On Wednesday, Piedmont opened the trading session with an inside bar pattern and bulls came in and caused the stock to break up above Tuesday’s trading range to print a higher high. After breaking up from the mother bar, Piedmont was attempting to regain support at the 21-day exponential moving average (EMA) but was struggling.
• If Piedmont can eventually break over the 21-day EMA and trade above the area for a period of time, the eight-day EMA will cross above the 21-day, which would give bulls more confidence going forward. If Piedmont is unable to break up through the 21-day EMA later on Wednesday, the stock may need to consolidate under the area and print a possible second higher low to gain strength.
• Piedmont has resistance above at $52.20 and $57.03 and support below at $47.66 and $41.65.

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