While most of the Magnificent 7 stocks achieved record highs in December 2024, one notable outlier has been showing signs of weakness in recent months. Although the stock price has not yet broken down, the decline in volume and the divergence of bearish momentum suggests that it is only a matter of time before a breakdown occurs. Today, we analyze the chart of Nvidia (NVDA), see how the technical landscape has changed in recent weeks, and identify potential downside targets for this once fast-growing semiconductor company. I will. Problems with NVDA from a technical perspective have been building up for some time. On the weekly chart, we can see that the price has made new highs in October and November, while both the RSI and PPO indicators are trending down. This shows that while the price is rising, momentum is rising on a weak reading. Generally speaking, I think a long-established upward trend can be considered “innocent until proven guilty.” Nvidia’s long-term uptrend still appears to be continuing, but the signs of weakening momentum on the weekly chart suggest it is nearing the end of the uptrend phase. Levels to watch A similar divergence of bearish momentum can be seen on the daily chart, with the RSI trending downwards since October despite the rise in price action. Nvidia peaked just above $150 in November before hitting an even lower high around $145 in early December. I consider the price movement over the past 6-8 weeks to be a consolidation phase, with fairly stable support levels around $132 and resistance levels around $150. With this kind of technical setup, the best approach is to wait for a definitive breakout in either direction. A break above the $150 resistance level would signal an influx of purchasing power and a possible resumption of the uptrend. Considering the bearish signs on the weekly chart, a more likely scenario would be a downside break at $132. Next, let’s take a look at the volume trends to see if there are any signs of distribution that might support the breakdown theory. The Chaikin Money Flow Indicator is used here to measure volume trends over time. Notice how the indicator moved well above the zero line during the May and October bullish trend stages and compare it to the current configuration where CMF is basically hovering around the zero line. The lack of volume support confirms Nvidia’s consolidation phase and suggests that buyers and sellers are essentially in equilibrium with neither side taking the lead. This may be the most important chart to watch to assess a potential breakdown, as a negative CMF reading suggests a new distribution phase has begun. How low can it go? If the breakdown of support around $132 is confirmed, what kind of downside price objective would we expect? One of the classic measurement techniques is to take the height of the price pattern and predict a similar trend after the breakout. is to calculate the movement of. For NVDA, this suggests a ~13.7% downside below $132, with a downside price target near $114. This downside target aligns very well with the 200-day moving average, which NVIDIA hasn’t actually touched since January 2023. If NVDA completes a pullback to its 200-day moving average, price, momentum, and volume readings will need to be reevaluated to determine its likely future path. However, given the long-term strength on the weekly chart, this could be an opportunity to acquire one of the top AI names at a deep discount. -David Keller, CMTmarketmisbehavior.com Disclosure: (none) All opinions expressed by CNBC Pro contributors are solely their own and do not reflect the opinions of CNBC, NBC UNIVERSAL, its parent or affiliate companies Not. It may be broadcast on television, radio, the Internet, or other media. The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The content is general in nature and does not reflect your unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
