The Pilbara Minerals Ltd (ASX: PLS) share price has recorded notably larger trading volumes this week.
This comes despite the company not releasing any price-sensitive announcements since the results of its BMX auction earlier this month.
At Thursday's market close, shares in the lithium miner finished 1.92% lower at $3.06 apiece.
Let's take a look at what could be spurring investors to exchange ownership papers in Pilbara Minerals lately.
What's going on with Pilbara Minerals this week?
After climbing to a four-month high of $3.25 on Tuesday, the Pilbara Minerals share price has tumbled by 6% since.
Trading volumes were in line with the 30-day moving average of 20 million shares being bought and sold. However, on Wednesday, this level increased to almost 50 million shares being swapped.
One reason why could be the relative strength index (RSI) which hit 78 on 15 August – just before traders 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.
In this instance, when the RSI touched 78, Pilbara Minerals shares were considered to be overbought by investors. Hence, this caused a retracement in the RSI as well as the share price in the following days.
It appears that investors were taking profit after the share rose 65% from its year-to-date low of $1.975 on 14 June.
Currently, the RSI for Pilbara Minerals shares stands at 64 (within the acceptable range below the sell signal).
Keep an eye out next Tuesday as the company is scheduled to report its full-year results for FY 2022.
Pilbara Minerals share price snapshot
With the lithium spot price rising to unprecedented levels, the Pilbara Minerals share price has accelerated by 43% in the past year.
Its shares are down 4% in 2022 but this is because of the extreme volatility that impacted the market earlier on in the year.
In comparison, the S&P/ASX 200 Materials (ASX: XMJ) sector lagged in July and is down 2% year-to-date.
Pilbara Minerals presides a market capitalisation of approximately $9.29 billion.
