Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Chart Of The Day: NVIDIA On Lower Path To $92

By Investing.com (Pinchas Cohen/Investing.com)Stock MarketsMay 12, 2022 09:23
ca.investing.com/analysis/chart-of-the-day-nvidia-on-lower-path-to-92-200508725
Chart Of The Day: NVIDIA On Lower Path To $92
By Investing.com (Pinchas Cohen/Investing.com)   |  May 12, 2022 09:23
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Two weeks ago, Intel (NASDAQ:INTC) CEO Pat Gelsinger predicted the computer chip industry would be under-supplied through 2024. Gelsinger blamed insufficient manufacturing equipment.

Last year semiconductor stocks outperformed the tech industry and achieved fresh records amid a supply crisis.

Given the delicate and complex production, the industry has always been supply-challenged. Chip production is expensive so producers only want to make exactly what is needed. Naturally, that has led to periodic shortages. However, COVID-19 lockdowns caused chipmakers to stop production entirely as they expected ultra-low demand.

And since coronavirus lockdowns have been lifted, consumerism has exploded, increasing insatiable demand, especially for cars that require computer chips.

Despite this, the semiconductors have not escaped the recent bear market in tech. The Philadelphia Semiconductor Index is down 31% from its Jan. 3 all-time high, while the NASDAQ 100 lost 28.6% since its Nov. 22 all-time high.

However, NVIDIA (NASDAQ:NVDA) is even worse for wear. Its share price is down 52.2% from its Nov. 22 all-time high.

Shares in the Santa Clara, California-based chipmaker sold off after being downgraded by Baird due to slowing demand amid an embargo by Russia. Also, tightening environmental regulations is a concern, as it may cause volatility in the industry. On top of all that, US politics will also play a vital role in the industry's fortunes, as Democrats and Republicans are trying to boost production.

So we think NVDA is on a path to $92.

NVDA Daily
NVDA Daily

The stock completed an Upward Sloping Head & Shoulders top. The right shoulder was higher due to demand strength amid the aforementioned supply crisis, as bulls attempted to raise the price. However, the price peaked on May 11, almost 20% below its record on Nov. 22.

As the price was crashing, the 50 DMA dived through a falling 200 DMA, triggering the most potent Death Cross. The 100 DMA dipped below the 200 DMA yesterday, forming a bearish formation: each MA is below a longer one, demonstrating weakening pricing. Since then, the stock completing back-to-back continuation patterns, the first to help traders complete the H&S and the second to deepen their penetration to the downside.

Note the perfect recent peaks and troughs establishing the downtrend fit into a Falling Channel, meaning the price could be ripe for a corrective rally.

On the weekly chart, this week's trading pushed the price below the 100 WMA, with a Falling Gap, after doing the same to the 50 WMA, just before completing the H&S top.

Trading Strategies

Conservative traders should wait for the price to retest at least the preceding Rising Flag pattern, if not the much larger H&S top, and wait for evidence of distribution—when considerable interest will slowly add to its supply.

Moderate traders could wait for a better entry, if not for confirmation, for the same return move.

Aggressive traders could enter a long contrarian position, counting on a return move that would bounce off the bottom of the Falling Channel, before joining more cautious traders with a short along with the downtrend. This is a risky move but may offer high reward.

Trade Sample - Aggressive Long Position

  • Entry: $160
  • Stop-Loss: $155
  • Risk: $5
  • Target: $185
  • Reward: $25

Trade Sample - Follow Up Aggressive Short Position

  • Entry: $185
  • Stop-Loss $180
  • Risk: $5
  • Target: $95
  • Reward: $90
  • Risk-Reward Ratio: 1:18
Chart Of The Day: NVIDIA On Lower Path To $92
 

Related Articles

Chart Of The Day: NVIDIA On Lower Path To $92

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email