Active Traders Are Turning Bullish on Industrial Metals (JJM, JJC)

JJM

24.43

Created with Highstock 4.2.6

JJC

29.51

Created with Highstock 4.2.6

When it comes to trading commodities, many products are trading within clearly defined downtrends for a variety of reasons ranging from oversupply to poor weather. One group of commodities that has been able to move counter to the rest is industrial metals. While continued discussion about increased spending on American infrastructure has acted as a strong catalyst to price moves, it seems that nearby support levels could be the next item to propel prices higher. In the article below we’ll take a look at the charts and try to determine the best plan for trading the strength in industrial metals. (For more, see: Can Industrial Metals Make a Comeback?)

iPath Bloomberg Industrial Metals Subindex Total Return ETN

Investors looking to gain exposure to metals such as copper, zinc, and aluminum have traditionally had to rely on the futures market. However, given the rapid rise in popularity of exchange-traded notes, retail investors can now purchase assets such as the iPath Bloomberg Industrial Metals Subindex Total Return ETN (JJM

). For those not familiar, this fund is comprised of futures contracts on three of the aforementioned industrial metals as well as nickel. Taking a look at the chart, you can see that the ETN is trading within a strong uptrend and the recent move toward the combined support of the 200-day moving average and dotted trendline could just be what the bulls have been waiting for. This chart is a good example of how the bulls look to time their entry as close to the long-term averages so that they can make the most of the risk/reward. Purchases near the trendline at any time over the past year have shown to be an excellent strategy. (For more, see: Shift Your Attention From Precious Metals to Industrial Metals).

 

iPath Bloomberg Copper Subindex Total Return

Of the industrial metals, the one that looks poised for the strongest rally is copper. Taking a look at the chart of the iPath Bloomberg Copper Subindex Total Return ETN (JJC

), you can see that the price has been trading within a period of consolidation since its strong run higher after the results from the U.S. Presidential election in November. The approaching support of the 200-day moving average could be just what is needed to entice the bulls to look for their entry points. The nearby support levels combined with the recent pullback has created some of the best risk/reward readings so far in 2017. Based on the charts, we’d expect traders to place buy orders as close to the trendline as possible and then protect them by placing stop-loss orders below $27.72. (For more, see: Investing In The Metals Markets).

 

iPath Bloomberg Aluminum Subindex Total Return ETN

One of the most overlooked commodities can be aluminum, but the chart of the iPath Bloomberg Aluminum Subindex Total Return ETN (JJU

) is suggesting that it is worth paying attention to. This chart is a clear example of the shifting trend that is taking place in the industrial metals complex. Active traders may choose to remain patient and look for an entry closer to the 200-day moving average like the case that is playing out in copper. (For more, check out: 3 Commodity Charts to Watch in 2017).

 

The Bottom Line

In recent days industrial metals such as aluminum, copper, and zinc along with the associated miners have renewed the interest of many active traders. More specifically, the pronounced shift in the trend combined with nearby support is creating some of the best risk/reward setups anywhere in commodities. (For more, see: These Commodities Are Trading Near Major Levels of Support).

At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.

 

 

Ads

• Lithium Will Replace Oil

  subscribe.energyandcapital.com

  The Lithium-Ion Battery Will Replace Oil Within the Next Decade. The Time to Invest is Now

• Lithium to Replace Fuel?

  subscribe.wealthdaily.com

  The Rise of Electric Vehicles Will be the End of Gas-Invest in its Replacement, Here's How

• Top 5 Oil Stocks for 2017

  energyandresourcesdigest.com

  Oil is set to flow in 2017. Here's how you can profit. Free report.

Related Articles

RELATED FAQS