Robotics and artificial intelligence (AI) are two topics that are on the minds of many investors due to the segment's projected ability to disrupt how business is conducted in the future. In this article, we'll take a look at three chart patterns from across the sector that suggest the bulls are stepping in and that prices are poised to break higher from here.
Global X Robotics and Artificial Intelligence Thematic ETF (BOTZ)
Exchange-traded products are the vehicle of choice for active traders looking to gauge the short-term direction of any given niche. When it comes to robotics and artificial intelligence, the most popular fund is the Global X Robotics and Artificial Intelligence Thematic ETF (BOTZ), which comprises 37 holdings spanning industrial robotics, automation, semiconductors, and autonomous vehicles.
Taking a look at the chart below, you can see that the price of the fund has trended toward the long-term support of its 200-day moving average. The price action over the past several months suggests that the sector is undergoing a period of consolidation, and the move above the support levels suggests that a major reversal is underway. Based on the pattern, active traders will most likely set their stop-loss orders below $19.38 in case of a sudden sell-off and in an attempt to maximize the risk-to-reward setup.
NVIDIA Corporation (NVDA)
When it comes to machine learning, artificial intelligence, and related subsectors, the company that is nearly impossible to ignore is NVIDIA Corporation (NVDA). Taking a look at the chart below, you'll notice that the stock has been trading within a period of consolidation during 2019 and looks well positioned to start a long-term move higher. The recent bullish crossover between the 50-day and 200-day moving averages is known as the golden crossover and is commonly used by active traders to mark the start of major uptrends. From a risk-management perspective, stop-loss orders will most likely be placed below $161.49 in case of a shift in sentiment and to take advantage of the lucrative risk-to-reward setup.
ABB Ltd. (ABB)
Another top holding of the BOTZ ETF that could be worth a closer look is ABB Ltd. (ABB), which is currently trading at the mid-point of a well-defined range. As you can see from the chart below, the price has recently bounced off of a major level of resistance and has found support near the 200-day moving average. Recent strength has triggered a bullish crossover between the moving averages, which suggests that the bulls are in control of the momentum and that prices could be poised to move toward the September highs and eventually beyond.
The Bottom Line
Robotics and artificial intelligence are lucrative fields to be sure and therefore deserve a position in almost any portfolio. Based on the patterns discussed above, it appears as though now could be an ideal time to buy.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.