Key Takeaways
- Nvidia shares jumped Tuesday morning after the AI investor favorite said it plans to resume selling one of its most popular chips to China.
- After reclaiming the 200-day moving average in mid-May, Nvidia shares have continued to trend higher, though trading volume and volatility have contracted.
- Trend analysis, which takes the stock’s move higher throughout June and repositions it from this month’s low, projects a near-term price target of around $178.
- Investors should watch key support levels on Nvidia’s chart around $159, $150 and $143.
Nvidia (NVDA) shares jumped premarket trading on Tuesday after the AI investor favorite said it plans to resume selling one of its most popular chips to China.
The chipmaker, which recently became the first company in the world to reach a $4 trillion market capitalization, said it’s filing applications with the U.S. government to resume sales of its H20 graphics processing unit (GPU) and has been given assurances that licenses will be granted. Nvidia also unveiled a new chip specifically for China called the RTX Pro GPU, which the company said is fully compliant with U.S. export controls and suitable for use in smart factories and logistics.
Through Monday’s close, Nvidia shares had gained nearly 90% from their early-April low and were up 22% since the start of the year, as major tech companies continue to ramp up spending on AI infrastructure that depends on the company’s chips. The stock was up more than 4% at around $171 before the opening bell on Tuesday.
Below, we take a closer look at Nvidia’s chart and use technical analysis to identify key price levels worth watching out for.
Uptrend Continues, Trading Volume Contracts
After reclaiming the closely watched 200-day moving average (MA) in mid-May, Nvidia shares have continued to trend higher, a move that has coincided with the relative strength index staying near its overbought threshold for most of that time, signaling strong price momentum.
In another win for the bulls, the 50-day MA crossed back above the 200-day MA in late June to form a golden cross, a bullish chart pattern that points to a new trend higher.
However, trading volume and volatility have contracted in recent months, suggesting market participants may be waiting for the chipmaker’s earnings report next month before deploying further capital.
Let’s analyze the technicals on Nvidia’s chart to project where the shares may be headed if the uptrend continues and also identity support levels worth watching during potential retracements in the stock.
Where are Nvidia’s Shares Headed Next?
Investors can apply bars pattern analysis to predict how the stock’s current trending move may play out.
When applying this technique to Nvidia’s chart, we take the stock’s trend higher throughout June and reposition it from this month’s low. This projects a price target of around $178, implying about 8% upside from Monday’s closing price.
We selected this earlier trend as it followed a minor profit-taking dip, closely mimicking the current price action after a similar brief pullback at the start of July.
Key Support Levels Worth Watching
The first lower level worth watching sits around $159. Retracements in the stock could initially find support near last month’s high.
Selling below this level could see the shares touch support near the key $150 level. Investors may look for buying opportunities in this location near a series of peaks that formed on the chart between November and January.
Finally, a more significant pullback in Nvidia shares opens the door for a retest of lower support around $143. This area may attract buying interest near a consolidation period that developed on the chart in mid-June, which also aligns with a range of corresponding trading activity stretching back to late October.
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As of the date this article was written, the author does not own any of the above securities.