Key Insights
- Keep an eye on Nvidia as it prepares to release its earnings report after the market closes on Wednesday.
- Last Friday, a bearish engulfing pattern appeared, hinting at a possible drop in stock prices.
- Important support levels to watch include $130, $113, and $102, while key resistance levels are around $153 and $174.
Nvidia (NVDA) is gearing up for an important earnings report this Wednesday. Known for its strong perfo rmance in the AI sector, the company is expected to show a 73% growth in fourth-quarter revenue compared to last year. Predictions suggest a net income of $21.08 billion, up from $12.84 billion.
So far this year, Nvidia’s shares have remained flat, though they climbed 12% in October. Recently, however, the stock dipped by 4.1% to $134.43 amidst broader market declines. Analysts generally remain optimistic about Nvidia, especially as tech companies increase their investments in AI technology.
Current Price Trends
Nvidia’s shares have been moving within a descending channel since mid-December, with a noticeable drop in trading volumes. The recent bearish engulfing pattern is significant; similar patterns in the past have preceded further price drops.
The relative strength index (RSI) is also showing lower highs, indicating that buying momentum is slowing down. This makes understanding the key support and resistance levels essential.
Support Levels to Watch
The first critical support level is around $130. This area aligns with a trendline drawn from the peak in August to troughs in December and January.
If the stock falls below $130, it may drop to $113. This level is close to the swing low from earlier in the month and overlaps with historical trading levels from last year.
A more severe drop could push Nvidia down to $102, where support may appear near the late May opening price and past lows from August and September.
Resistance Levels to Monitor
If Nvidia breaks above the descending channel’s upper trendline, it could target the $153 level next. This price point is near the stock’s all-time high and would likely serve as a resistance area.
By calculating the width of the current descending channel and adding it to the top trendline, investors can identify a potential bullish target. For instance, adding $32 to $142 sets a target around $174, about 30% higher than Friday’s closing price, potentially offering an opportunity for profit-taking.
