Nvidia Stock Spikes Higher In This Bearish Trend: What To Watch For Next

Zinger Key Points
  • Nvidia is trading in a confirmed downtrend, making a series of lower highs and lower lows.
  • On Thursday, Nvidia was bouncing in relief in tandem with the S&P 500, which was spiking higher despite inflation running hot.

NVIDIA Corporation NVDA was bouncing about 3.5% on Thursday, in tandem with the S&P 500, which was surging almost 2% higher off Wednesday’s closing price and almost 5% off Thursday’s open.

The Labor Department reported an 8.2% year-over-year increase in the consumer price index for September, which caused many stocks to gap down Thursday. However, bearish volume came into the S&P 500 intraday, causing the market to spike higher.

Newegg Commerce Inc. NEGG announced that Nvidia’s NVIDIA GeForce RTX 4090 graphics cards are now available at its online store. The new graphic card delivers up to four times the performance of the previous version and are powered by the new NVIDIA Ada Lovelace architecture.

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The news caused a relief bounce in Nvidia’s stock, which has been weighed down heavily recently following the U.S. government's decision to place restrictions on exports of some high-end chips to China.

On Tuesday, Citigroup analyst Atif Malik maintained a Buy rating on Nvidia and lowered the price target from $248 to $210.

The Nvidia Chart: Nvidia has been trading in a downtrend since Aug. 16, with the most recent lower low formed at the $112.43 on Tuesday and the most recent confirmed lower high printed on Oct. 6 at $136.56. On Thursday, Nvidia was spiking higher but not enough to negate the downtrend with the formation of a higher high.

  • If Nvidia closes the trading day near its high-of-day price, the stock will print a bullish engulfing candlestick, which could indicate higher prices will come again on Friday. If that happens, bullish traders will want to see Nvidia regain the eight-day exponential moving average (EMA) and trade up toward the 21-day EMA.
  • If Nvidia closes the trading day with a significant upper wick, lower prices may come on Friday, which could suggest that the next lower high within the downtrend has occurred. The second most likely scenario in that case is that Nvidia will print an inside bar pattern on Friday to consolidate Thursday’s move higher.
  • There’s a gap that exists on Nivida’s chart between $145.47 and $149.59. Gaps on charts fill about 90% of the time, which indicates Nvidia will eventually trade up to fill the empty trading range, although it could be a long period of time before that happens.
  • Nvidia has resistance above at $119.46 and $125.86 and support below at $108.50 and at the psychologically important $100 mark.
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