Key Takeaways
- Nvidia shares slumped nearly 9% last week as investors scaled back bets in some of this year’s top performing AI chipmakers over mounting concerns about tougher trade restrictions and geopolitical risks.
- Nvidia shares remain in a long-term uptrend, but volumes have declined since the stock reached its record high last month, potentially indicating slowing momentum, or possibly just a pause in the trend.
- A hold above the $116 level may form the foundation for another trending leg higher to around $195 based on a bars pattern extracting the trend from April to June and applying it to this initial support area.
- Other key support levels on Nvidia’s chart include $97 and $75, where the stock could attract buying interest near trendlines connecting important price points.
Nvidia (NVDA) shares slumped nearly 9% last week as investors scaled back bets in some of this year’s top performing artificial intelligence (AI) chipmakers over mounting concerns about tougher trade restrictions and geopolitical risks.
Below, we take a closer look at the AI darling’s technicals and point out important price levels to eye amid the potential for heightened volatility.
Volume Trending Lower
Nvidia shares remain in a long-term uptrend, with the 50-day moving average (MA) sitting comfortably above the 200-day MA. However, the AI chipmaker’s stock has traded sideways to lower after setting its record high last month.
Importantly, volume has also trended lower since that time, potentially indicating slowing momentum, or possibly just a pause in the trend, after the stock’s groundbreaking gains fueled by insatiable enterprise demand for chips that power AI infrastructure.
Watch These Important Price LevelsÂ
Over the coming weeks, investors should watch several key areas on Nvidia’s chart that could come into play.
The first sits around $116, where market participants will likely be watching if buyers can defend a short-term horizontal line that connects a series of recent price action and the 50-day MA.
If the stock can hold this important area, it may form the foundation for another trending leg higher to around $195 based on a bars pattern extracting the trend from April to June and applying it to this initial support level.
A breakdown below the $116 area could open the door to a retest of the $97 level, a location on the chart that may encounter support near a trendline linking two prominent price peaks in March and a period on consolidation prior to the late May earnings gap.Â
A deeper correction in the stock could see a decline to the $75 level, currently 36% below Friday’s close, where the price could attract bargain hunters near a horizontal line that links a pause in the uptrend between January and March with the April swing low.
Investors should also keep an eye on the relative strength index (RSI). There’s a greater chance that Nvidia’s price could resume its longer-term uptrend from the levels outlined above if the indicator reaches oversold conditions at the same time.
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As of the date this article was written, the author does not own any of the above securities.