In a heavy saucepan over low heat, melt caramels with water. In a large shallow bowl, combine chips and pecans.
Pour caramel mixture into a 2-cup glass measuring cup. Dip each pretzel about one-third of the way into the caramel mixture (reheat in microwave if mixture becomes too thick for dipping). Allow excess caramel to drip off, then roll pretzels in the chip mixture. Place on waxed paper until set. Store in airtight containers. Yield: 2-1/2 dozen.