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Highlights

  • Vulcan shares have been in a long downtrend.
  • In the last one year, the stock has fallen by nearly 43%.
  • VUL shares are now trading below their 21-period and 50-period SMAs.

Vulcan Energy Resources Limited (ASX: VUL), which non-institutional investors mostly own, has been on a downward trend. In the last one year, the stock has fallen nearly 43%, while in the last one month itself, it has tanked by 28%.

Earlier this month, on 5 May 2023, the stock ended with an over 16% loss after it resumed trading following a trading halt. According to an ASX release, the company had raised 66 million euros or AUD 109 million from institutional investors through a fully underwritten placement at AUD 5.10 per share, which was a 17.2% discount to VUL's closing price of AUD 6.160 on 3 May 2023 (one day prior to the trading halt). Vulcan wants to use the funds raised from the placement for its project development activities.

In the last one week itself, VUL shares have corrected 13%. Given the recent fall in VUL shares, the stock has already entered oversold territory, indicating possibilities of a rebound in the near term. Let's delve deeper into its price chart for further clues about its possible near-term direction.

VUL’s Technical Analysis:

Despite being in a downtrend, as indicated by a trendline with a downward inclination, the leading indicator RSI (14-period) trades in the oversold region, indicating that stock might witness a rebound from hereon. In addition, the indicator has recovered from its all-time low, lending support to the positive bias. Prices are trading below the 21-period and 50-period SMAs, which may act as the resistance levels for the stock. Important support for the stock is positioned at AUD 3.590, while key resistance is placed at AUD 4.750.

Daily Technical Chart – VUL

The technical levels for the stock were evaluated as per the as closing price of AUD 4.280 per share, down by -0.23%, as on 18 May 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.