Important points
Nvidia (NVDA) stock is likely to remain on investors’ radar screens after plummeting on Tuesday, just one day after hitting a closing high.
Tuesday’s decline came after Bloomberg reported that the Biden administration is considering restricting AI chip exports to some Middle Eastern countries. The news tempered optimism that demand for Nvidia’s chips is surging as tech giants scale up AI infrastructure amid tight supplies.
Nvidia stock fell 4.7% on Tuesday, closing at $131.60.
Below, we analyze the technicals on NVIDIA’s chart and identify key price levels that investors may want to watch.
Symmetrical triangular breakout has no volume
Nvidia stock consolidated within a symmetrical triangle from June to September before breaking out of this pattern earlier this month.
While this breakout signals a continuation of the stock’s long-term uptrend, it’s worth pointing out that this move was made on below-average volume, indicating a lack of conviction behind this move. It shows.
Conversely, Tuesday’s selloff marked the highest single-day stock volume in nearly a month and raised the possibility of a bull trap, a trading event that lures investors into buying a breakout before prices abruptly reverse. .
Let’s take a look at the three important support levels on the AI chip maker’s chart. Also, use technical analysis to predict a potential bullish price target above the stock’s all-time high (ATH).
Important support levels to be aware of
The first is around $125, with the stock finding a confluence of support from the upper trend line of the symmetrical triangle and the horizontal line connecting the range of comparable trading levels on the chart from early June to late September. There is.
A decisive break below this level could confirm a bullish trap and trigger a decline to the $115 level, with the stock moving around the lower trendline of the triangle and multiple small peaks and troughs dating back to late May. There is a possibility that you will encounter a buying desire.
Further selling could cause the stock to revisit the major support near $97. This position is currently just below the rising 200-day moving average (MA) on the chart, giving investors a buying opportunity at prices near the twin highs of March and just above August. You can search. low.
Actual moving price target
Investors can use the measured movement, also called the measurement principle by chartists, to predict a bullish price target above the stock’s ATH.
It works by calculating the distance between the symmetrical triangular trendlines around the start of the pattern and adding that distance to the breakout point.
In other words, add $50 to $127 and predict a price target of $177. This estimate is about 34% above Tuesday’s closing price and points to a potential area on the chart where investors are willing to lock in profits.
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As of the date this article was written, the author did not own any of the securities mentioned above.
