Key Takeaways
- Nvidia shares rose in premarket trading Tuesday , recovering after a more than 6% drop due to a
broad-based market selloff and reports of delays in the company’s highly anticipated Blackwell
chips. - The stock closed above the key $97 support area on Monday, despite remaining positioned
between the 50- and 200-day moving averages. - Nvidia shares may find support around $75 and $51, with potential resistance near $116 and
$136.
Nvidia’s Recent Performance and Market Challenges
Nvidia (NVDA) shares saw gains in Tuesday’s premarket trading session, following a significant
drop the previous day. This decline was triggered by a market-wide selloff and news that the
company’s Blackwell chips would be delayed by at least three months due to design flaws.
Since reaching a record high on June 18, Nvidia’s stock has fallen 26%. This decline comes as
investors have been cashing in on chip stocks amid concerns about tightening export restrictions
with China and high valuations driven by the AI boom, particularly following the release of
ChatGPT by OpenAI in November 2022.
Technical Analysis: Key Support and Resistance Levels
Support Levels to Monitor
$97 Support Area: On Monday, Nvidia’s stock recovered from its session lows to close above the
$97 support area. This level is crucial as it helps determine the stock’s immediate future trajectory.
$75 Support Level: Should Nvidia shares fail to maintain the $97 support, the next critical level to
watch is $75. This is just below the 200-day moving average (MA), aligning with the February peak
and the April swing low.
$51 Support Level: A further breakdown could see the stock drop to around $51. This level is
significant as it represents the convergence of three previous peaks, including record highs
between August and December last year.
Resistance Levels to Watch
$116 Resistance Level: If Nvidia’s stock holds the $97 support, it could face resistance around
$116. This level corresponds to trading ranges observed between May and early August and is
near a recent failed retest of the 50-day MA. It also aligns with the 50% Fibonacci retracement
level from the June high to the August low.
$136 Resistance Level: Should the stock rally above $116, it may find further resistance around
$136. This level is significant as it nears the stock’s record close and aligns with the July swing
high.
Conclusion
Nvidia’s stock is currently navigating a challenging landscape, influenced by market-wide volatility
and specific issues like the delay in its Blackwell chips. Investors should closely monitor the key
support and resistance levels outlined above to better understand the stock’s potential
movements. Holding above the $97 support area is crucial for a bullish outlook, while a
breakdown could signal further declines. Conversely, breaking through resistance levels at $116
and $136 could indicate renewed investor confidence and potential for upward momentum. As
always, staying informed and vigilant is essential in these volatile market conditions.
