The Piedmont Lithium Inc (ASX: PLL) share price is crashing back down to earth after rocketing 85% in the past month.
At the time of writing, shares in the Australian lithium miner are down 10% to 81 cents.
Despite the heavy fall, its shares are still up 48% in a month.
Let's look at what could be driving the fall in the company's share price.
Image source: Getty Images
What's happened to Piedmont shares?
Investors are offloading Piedmont shares in droves following a mixed session across the lithium space.
Shares in Sayona Mining Ltd (ASX: SYA) and Lake Resources NL (ASX: LKE) are up 2.78% and 1.65%, respectively.
However, other lithium shares such as Global Lithium Resources Ltd (ASX: GL1) and Li-S Energy Ltd (ASX: LIS) are down 6.56% and 5.39%, respectively.
Piedmont hasn't reported anything today that would explain why its shares have fallen so sharply.
However, given the sudden acceleration in the past month, there were a few indicators that its shares were overbought.
For example, the relative strength index (RSI) touched 82 on 17 August – just before sellers 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.
Furthermore, the Piedmont share price was outside the Bollinger Bands. This works well in conjunction with the RSI, which gives oversold or overbought signals of the share.
Piedmont share price summary
Despite the recent fall, the Piedmont share price is up 10% in 2022.
When looking at the longer term, the company's shares are ahead by 18% over the past 12 months.
For context, the S&P/ASX 200 Index (ASX: XJO) has tumbled 5% in 2022, and since this time last year.
Based on today's price, Piedmont presides a market capitalisation of roughly $474.81 million.
