When in Doubt, Buy Precious Metals

Heightened levels of market volatility in recent months have triggered a flood of uncertainty among fundamental investors and active traders alike. Globally, there is rising interest in hedging against sharp sell-offs, and many are turning to hard commodities such as precious metals. In this article, we take a look at several charts of interest and try to determine how followers of technical analysis will be positioning themselves over the weeks and months ahead. (For more, see: Traders Turn to Precious Metals Among Volatility.)

ETFS Physical Precious Metals Basket Shares

The recent market-wide pullbacks have led some traders to believe that the selling pressure in some of the precious metals will continue well into the summer. By taking a look at the chart of the ETFS Physical Precious Metals Basket Shares, you can see that the price seems to have reacted to a nearby level of resistance and has started to retrace toward the major support of its 200-day moving average (red line). This is common behavior and shouldn’t really come as a surprise to experienced traders. In fact, traders may want to look at the retracement as a buying opportunity because a bounce higher, followed by a break beyond the upper resistance, could force some to readjust their targets to $69.50, which is equal to the upper resistance plus the height of the pattern. The well-defined risk-to-reward ratios make this a segment to watch, and we’ll take a closer look at the a few components to see exactly how traders are trading the move. (For more, see: Precious Metals Pullback Suggests It Is Time to Buy.)

 

The recent pullback in precious metals has pushed prices toward major levels of support, generating lucrative risk-to-reward ratios. …read more

Read more here: When in Doubt, Buy Precious Metals

Category: GLTR, GLD, SLV

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