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Technical Analysis: Nvidia Corporation (NASDAQ:NVDA)

Nvidia Corporation NVDA

Market corrections are healthier than they are negative in the long-term.  Times like these can be seen as buying opportunities for choice stocks that you think will rebound on the bottom.  We wrote a more in depth article on market corrections and how to survive them, but the gist of a correction is that they happen often, don’t last long, and typically rebound to higher levels.

Since August of 2015, shares of Nvidia Corporation (NASDAQ:NVDA) rose over 1,300% at the peak of its rally.  Unfortunately, this month is the most NVDA has declined in a single month since 2008, during the financial crisis.  Shares have declined nearly 33% this month, following similar price action to other tech stocks as the market takes a hit.

Let’s take a look at NVDA’s chart and see how it is setting up during this market correction.

1-Month Chart Perspective

NVDA 1-month Chart

On the 1-month candle-stick chart, NVDA has broken down out of its uptrend channel that started in March of 2016 (highlighted green channel on the chart).  There is a bit of resistance at $195 which it bounced off earlier today.  Down the road there is more resistance at $144 and $110, as we marked with a red line on the chart.

The moving average convergence divergence (MACD) has made a death cross, and we’re beginning to see our first bar of red on the histogram since April 2013.

On the bright side, stochastic relative strength index (Stoch RSI) is telling us the stock may be a bit oversold.  Back in July of this year, stoch RSI began trending upwards after spending a bit of time in under 20.00.

1-Week Chart Perspective

NVDA 1-week Chart

To be honest, everything on the one week is on the decline for NVDA.  A bit of hope here is that NVDA looks like it could possibly find support around the $195 resistance, as it was not able to make it under that today.  MACD has dropped dramatically, along with stoch RSI and the CCI.  Taking a look at the indicators previous behavior and its link to price action, the dips don’t tend to last too long.

1-Day Chart Perspective

NVDA 1-day Chart

The 1-day chart tells a similar story to the 1-week, showing the decline since the market began to correct earlier in the month.  We see the price starting to try and form some support off of the previous resistance.  Personally, I’ll be watching the 1-day chart and have an alert set at the resistance levels we’ve discussed.  I believe that Nvidia has room to rebound if they manage to stay above the $195 resistance leading up to and after earnings.

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