For all of you CFD and equity traders out there, we’re taking a technical look at NVDA as the price action tightens up. Will see see a consolidation breakout setup? Or will there be another uptrend buying opportunity?
NVDA Dip Ahead? Buying Opportunity?
As we mentioned above, our focus today falls on Nvidia (NVDA), the world’s leading maker of hardware and software for a wide range of platforms including gaming, cloud computing and artificial intelligence to name just a few.
The stock’s value has increased dramatically since the 2020 Pandemic crash lows where it traded at a post-split price of around $45, now trading around the $220. With their products deeply in demand for the world’s leading innovations like AI, gaming metaverse, and autonomous driving, the odds remain good that the stock could see further appreciation long-term.
But we’re looking at short-term opportunities today, and we can see a couple of potential setups forming on the four hour chart above.
First, the pair is currently in consolidation mode, trading roughly between the $220 – $230 area, tighter than the weekly average true range of about $14. We don’t expect a big catalyst from the company until the next earnings release in November, so one possible scenario for shorter-traders to consider is that the range will continue. In that environment, range plays like shorting $230 or longing around $220 are setups to consider for quick profits.
Another scenario to consider is that we may see a dip in NVDA in the short-term, likely sparked by the broad risk aversion vibes we’re getting from the overall market. With the recent surge in the Delta virus over the past few months, traders seem to be focused on a global slowdown at the moment. If that’s the case, a technical argument for a potential support area could be made for the $200 – $210 area, which falls not only on the Fibonacci retracement area drawn on the chart above, but also the broken previous resistance area that held off the bulls in July and early August before breaking in late August.
And finally, an upside break of the consolidation pattern between $220 – $230 would likely bring in technical buyers. In that scenario, traders should watch for a sustained break and/or a break and retest of the $230 handle before planning out what would likely be a swing or longer-term position.
What do you guys think? NVDA continue to consolidate until their next earnings? Or is a dip ahead for NVDA if the rest of the market falls on global growth slowdown concerns?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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