Is the Johnson Matthey share price about to jump to a new 2021 high?

The Johnson Matthey (JMAT) share price is showing encouraging signs. Can the precious metals and chemicals company end the week with a bullish breakout?

Johnson Matthey plc (LON: JMAT) finished Wednesday at 3,065p, higher by 61p (2.03%).

Last week there were valid concerns that Johnson Matthey was about to break down below a key support level. However, on Tuesday, the share price jumped 2.28% and almost repeated the feat yesterday. The result of the two-day 4.5% gain has now left investors wondering if the Johnson Matthey share price may soon break out on the upside.

The world’s largest producer of catalytic converters recovered well from the hit it took during the height of the covid-19 pandemic. So far this year, the share price has increased by around 24%, although JMAT remains just under 9% below its 3,363p 2021 high.

However, recently the group announced that sales are back to pre-pandemic levels due to increasing auto demand in China. The company also reported sales growth of 63%in the first quarter due to the positive impact of rising metals prices.

Although notably, platinum prices have since tumbled, so it will be interesting to see if these gains continue throughout 2021. That being said, the technical outlook has improved in the last two days and should JMAT clear approaching resistance, it could well extend higher.

JMAT technical outlook

During last week’s decline, we can see the Johnson Matthey share price reversed at the support of the 200-day moving average at 2,907p. The average was reinforced by a rising trend line from the February low. This has created a strong confluent support level at 2,907.

Above the market, the 50 DMA at 3,075p and the 100 at 3,116 are immediate obstacles for the bulls to surpass. Furthermore, a descending trend line at 3,124p adds to the upside resistance. But the rising Relative Strength Index underpins the positive momentum and suggests the price may soon test the overhanging resistance. On that basis, a decisive penetration of 3,124p should encourage buying, and a logical target becomes this year’s record at 3,3363p.

However, this bullish scenario depends on JMAT holding above the 200 DMA. And therefore, a close below 2,907p would invalid the positive price prediction.

Johnson Matthey Share Price Chart

Johnson Matthey share price

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