Brocker.Org: Now Is the Time to Buy Base Metals (JJM, DBB)

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The insatiable appetite for risk by global investors has triggered a retracement in relatively slow moving commodities such as copper, zinc, and aluminum. In the article below we’ll take a look at charts of tracking funds that target segments of the base metals market because nearby support is suggesting that current levels are presenting an ideal buying opportunity. (For further reading, check out: What Does it Mean to Invest in Base Metals?)

iPath Bloomberg Industrial Subindex Total Return ETN

The retracement in industrial metals such as those listed above has sent the price of the iPath Bloomberg Industrial Subindex Total Return ETN (JJM) from its high of $26.18 to the recent close near $24. The weakness has pushed the price of the fund toward the long-term support of the 200-day moving average, which you can see from the chart below, has propped up the price on each attempted pullback over the past twelve months. Active traders will use the dotted trendline as part of their strategy for determining the placement of their buy and stop-loss orders. More specifically, based on technical analysis, traders will likely maintain a bullish outlook on this ETN until the price closes below $23.44. (For more, see: Can Industrial Metals Make a Comeback?)

PowerShares DB Base Metals Fund

Another exchange-traded product that is popular for gaining exposure to base metals is the PowerShares DB Base Metals Fund (DBB). As you can see from the chart below, this fund has been trading within a clearly defined uptrend since early 2016, and the recent retracement toward the combined support of the ascending trendline and the 200-day moving average could be an excellent time for strategic traders to look for an entry. Active traders will also look to the bullish crossover between the MACD indicator and its signal line (shown by the blue circle) as confirmation of a resumption in the dominant trend. (For more on this topic, check out: Active Traders Are Turning Bullish on Industrial Metals)

iPath Bloomberg Copper Subindex Total Return ETN

Copper has traded within one of the strongest uptrends since the announcement of the U.S. Presidential election in late 2016. Talk of increased spending on infrastructure across the U.S has sparked a strong rally, but as you can see from the iPath Bloomberg Copper Subindex Total Return ETN (JJC), interest in this story has faded in favor of other more lucrative opportunities. The recent bounce off of the support of the 200-day moving average (red line) suggests that the long-term uptrend is still clearly intact. Proponents of technical analysis will be looking to take advantage of pullbacks and buy as close to the long-term support levels as possible because it offers an ideal risk/reward ratio. (For more, see: Shift Your Attention From Precious Metals to Industrial Metals)

The Bottom Line

It appears as though active traders have lost interest in investment themes involving base metals such as a copper, zinc, and aluminum in favor of other high-risk opportunities in recent weeks. Based on the charts shown above, the recent retracement toward critical long-term support levels is presenting active traders an ideal buying opportunity. (For more, see: Shift Your Attention From Precious Metals to Industrial Metals)

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