Critical Price Levels to Keep an Eye On

Nvidia (NVDA) shares lost ground Thursday morning even as the AI chipmaker and investor favorite reported revenue and profit that topped analysts’ estimates.

While the results, released late Wednesday, broadly came in slightly better than expected, sales in the data center segment, which comprise the bulk of the company’s revenue, were slightly below Wall Street estimates. The outlook for the current quarter—which excludes sales of H20 chips to China amid uncertainty about whether exports to the country will resume—also disappointed some investors. Market participants have come to expect that Nvidia’s results and guidance will always blow past expectations.

Nvidia shares were down 1.5% at around $179 in midday trading. Coming into today’s session the stock had gained 35% since the start of the year, making it the biggest gainer among members of the Magnificent 7 group of mega-cap technology stocks, amid booming demand from major companies building their AI infrastructure.

Below, we take a closer look at Nvidia’s chart and use technical analysis to point out key price levels that investors will likely be watching.

Sideways Price Action After Recent High

After registering a fresh all-time high earlier this month, Nvidia shares have traded mostly sideways, indicating apprehension among market participants ahead of the chipmaker’s quarterly results.

While the relative strength index remained in bullish territory leading into earnings, the indicator had made consistently lower highs since topping out in mid-July, signaling weakening buying momentum.

Let’s identify key support levels to watch and point out an important overhead area worth eyeing if the stock rallies.

Key Support Levels to Watch

Initial earnings-driven selling could see the shares test key support around $174. This area may attract buying interest near the mid-July peak and a minor retracement in the stock last week.

A close below this location may lead to a retest of support at the $159 level. Investors could look for entry points in this area near the June high, which preceded a brief two-day dip before the stock resumed its uptrend.

Further selling opens the door for a decline to the key $150 level. The shares would likely encounter support in this region never multiple peaks that formed on the chart between November and January. 

Interestingly, this level closely aligns with a downside bars pattern target that takes the move lower following the chipmaker’s 2024 third-quarter earnings report and repositions it from the stock’s recent highs. This analysis provides clues as to how a similar post-earnings profit-taking phase may unfold.

Important Overhead Area Worth Eyeing

If Nvidia shares resume their longer-term move higher, investors should eye the $183 area. This location on the chart would likely attract significant attention near the stock’s recent trading levels just below the record high.

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As of the date this article was written, the author does not own any of the above securities.