TECHNICAL ANALYSIS: JSE platinum index continues new recovery high trend

The JSE platinum index continues to make new recovery highs as platinum stocks continue to be amongst the leaders on the JSE. 

This index has given a new upside breakout.

JSE PLATINUM INDEX – Higher targets still recommendation: HOLD/BUY IF NOT IN

Current Trend: Up on all main timeframes.

Chart Setup: The platinum index has just broken out above line 1 to confirm a short-term inverse head and shoulders continuation pattern (H/Sh), which is bullish. This is following on from a large inverse head and shoulders continuation earlier this year.

• Its Stochastic is entering its overbought zone, but can still continue higher for now given the new breakout. 

(Daily chart)

JSE platinum index

Strategy Details: Buy platinum stocks if not in (or add to holdings).  

Target: 49.20 is the target from the large inverse H/Sh, and slightly above it at 49.50 is the target from the smaller pattern. These are minimum targets. Ultimately expect it to get to a long-term resistance zone at lines 2 and 3 (54.30 to 58.50, respectively).

• Closest support is line 1 at 44.00. 

Stop-loss: For short-term positions only, the stop is a close below 42.00. Take at least half short-term profits at 49.20, then raise stop on the remainder e.g. to a prior two-day low. 

• Its medium-term stop is a close below 38.00. 

  • Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend trading courses, please go to www.themarket.co.za

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