Important points
Nvidia (NVDA) stock fell for the fourth consecutive session on Tuesday, extending the decline to a technical correction as the stock price fell 15% from last month’s all-time high.
Analysts remain bullish on the company’s prospects for 2025, but investors are worried that the company will produce new Blackwell chips in large quantities after reports of overheating issues were discovered last month, raising concerns about production delays. They may be seeking further confirmation of whether they can sell it.
Despite the recent downturn, the stock is still up about 160% since the beginning of the year, far outpacing the S&P 500’s return of 27% over the same period, amid strong demand for the company’s AI silicon.
The stock fell 1.2% to close Tuesday at $130.39.
Below, we take a closer look at the AI chip maker’s chart and use technical analysis to identify important price levels to watch out for.
Breakdown of 50-day moving average
Nvidia stock has remained mostly flat since hitting a record high in November, but fell below its 50-day moving average (MA) in the second half of last week, potentially setting the stage for further consolidation.
Inventories remain below long-term averages, but have risen slightly in recent trading, indicating increased selling activity. Furthermore, the Relative Strength Index (RSI) fell below 50, confirming the weakening of price momentum.
Let’s take a look at Nvidia’s chart and identify some key support and resistance levels that investors may be tracking.
Key support levels to look out for
In case of further selling, investors should first focus on the $115 level. Nvidia bulls could really enter this area around the 200-day moving average, which also closely aligns with the range of comparable price movements on the chart from May to October.
A breakdown below this key technical area could see the stock revisit the lower support near $102, with investors looking at the breakaway gap in late May and the formation in August and September on the chart. An entry point may be sought near the low of a significant trough.
Interestingly, this region also closely aligns with the predicted target value of the bar pattern, which superimposes the June-August correction in stock prices onto November’s all-time high (ATH).
Important resistance levels to monitor
It’s worth watching how the stock reacts to the $140 level if the stock regains its upward momentum. The stock could encounter resistance in this area, near the horizontal line connecting the June swing high and a series of similar price ranges from October to December.
Finally, further buying could fuel a bullish move to the $150 area, where investors book profits near the candlestick cluster just below the stock’s all-time high late last month. This is the area on the chart where decisions can be made.
Comments, opinions and analyzes expressed on Investopedia are for informational purposes only. Please read our warranty and disclaimer for more information.
As of the date this article was written, the author did not own any of the securities mentioned above.
