Impala Platinum Holdings Limited (JSE: IMP) faced a challenging kick-off to the year, witnessing a notable 18% decline in its share price within the initial three weeks. The company’s 2024 journey began with a labour dispute at its Royal Bafokeng mine, leading to a sit-in by 2,000 workers. Although the mine has resumed full operations, the share price has struggled, experiencing declines in seven out of the last eight days.
The significant downturn could be attributed, in part, to the robustness of the dollar, which recently achieved a one-month high against a basket of major counterparts. The market’s recalibration of expectations for aggressive rate cuts in the first quarter of the year seems to have played a role. Consequently, Platinum and Palladium prices have sustained declines, dropping by 9.6% and 15.09%, respectively, in the early weeks of 2024. With persistent headwinds in the metal market, the share price of Impala Platinum remains under pressure as the eagerly awaited late February earnings release approaches.
On the daily chart, the share price broke out of a descending wedge pattern and briefly experienced a strong bullish run, which saw the price push through the 25-SMA (green line), 50-SMA (blue line) and 100-SMA (orange line). However, the retracement soon followed, and the price now trades at a psychological support level of around R72.43, which has previously proven to be a challenging barrier to breach and represents the original breakout level from the wedge pattern.
If the support at R72.43 holds again, the price could pivot toward R75.64, the prior 61.8% Fibonacci golden ratio, and R78.84, where the 50-SMA meets the Fibonacci midpoint. This resistance level could potentially determine the next directional trend, as a breakthrough could signal a bullish presence that could push the price higher toward the 100-SMA at R84.13 in the upcoming sessions.
However, if the support at R72.43 fails to hold the selling pressure, the price could fall below the prior breakout level, potentially signalling the end to an unsustainable bullish run. In this case, support at R65.30 could sneak back onto the radar, with neckline support at R60.75 becoming a level of interest to the sellers.
Impala Platinum Holdings Limited’s share price has remained wounded heading into the new year. The strengthening US Dollar acts as a headwind to the upside potential, and if support at R72.43 fails to prevent a more prolonged downturn, the price could trickle down to R65.30 in the upcoming sessions.
Sources: Koyfin, Tradingview, SABC News, Impala Platinum Holdings Limited
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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