Key Takeaways
Shares of artificial intelligence darling Nvidia (NVDA) fell sharply in after-hours trading on Wednesday after the company beat expectations in quarterly profit but disappointed investors after its latest numbers suggested growth was slowing. The chipmaker has stunned Wall Street in recent quarters with astounding revenue reports fueled by insatiable demand for AI, setting a high bar for its latest earnings release.
Nvidia shares are up about 150% since the start of the year but have been volatile in recent months, falling as much as 33% between July and August, before mounting an incredible recovery ahead of the company’s earnings release, trading just 11% below its all-time high as of Wednesday’s close.
Nvidia shares fell 6.9% to $116.95 in after-hours trading on Wednesday.
Below, we’ll take a closer look at Nvidia’s chart and use technical analysis to point out key levels to watch in the price action following the earnings release.
Collapse prediction from rectangular formation
Nvidia shares, which have made an impressive recovery from lows this month, have traded in a tight rectangle shape for the past seven trading sessions ahead of the company’s highly anticipated earnings release. While trading volume remains relatively low, shares have seen increased trading this week, signaling portfolio rebalancing ahead of the quarterly earnings release.
Thursday’s expected profit-led decline is likely to send the stock below its recent rectangular and 50-day moving average, a move that could trigger further declines in the stock price.
Going forward, investors should monitor four key price levels that could come into play if AI company stocks continue to fall after their earnings reports.
Notable Nvidia pricing
The first level is around $116, an area that could provide initial support near the trendline connecting the May peak and the high of the smaller countertrend easing rally that occurred in early August.
A break below this level could send the stock lower to the $107 region, a spot on the chart where buyers might look for an entry point near a series of levels where the stock traded closely together from May through August.
Further selling could lead to a retest of the key $97 level, where Nvidia shares would likely encounter significant support near two peaks in March, the first of which marked the company’s all-time high.
Finally, it is worth noting the $91 area, a lower price objective projected when extracting a downtrend bar pattern from July-August and placing it off the high of the recent rectangle formation. If such a move were to materialize, it would confirm the stock’s descending channel and potentially retest this month’s lows.
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At the time of writing, the author does not hold any positions in any of the securities mentioned.
