Nvidia Stock Consolidates Recent Upswing: Is The Chipmaker Headed To All-Time Highs?

NVIDIA Corporation NVDA gapped down slightly to start Monday’s trading session after China announced a ban on competitor Micron Technology, Inc’s MU products, but buyers came in and bought the dip, causing the stock to trade near flat.

The tech giant is set to print its first-quarter 2024 earnings on Wednesday. Analysts expect Nvidia to report earnings of 92 cents per share on revenues of $6.52 billion. Ahead of the print, Nvidia has been settling into a bull flag pattern on the daily chart.

A bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines or into a tightening triangle pattern.

For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downward within the following channel for a short period of time. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.

Bullish traders will want to watch for a break up from the upper descending trendline of the flag formation, on high volume, for an entry. When a stock breaks up from a bull flag pattern, the measured move higher is equal to the length of the pole and should be added to the lowest price within the flag.

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The Nvidia Chart: Nvidia’s bull flag formed between May 15 and Monday, with the upward sloping pole created between that date and May 18 and the flag formed over the trading days that have followed. If the pattern is recognized and Nvidia breaks up from the flag on higher-than-average volume, the measured move is about 13%, which suggests the stock could rise to a new all-time high of about $350.

• Nvidia is also trading in an uptrend, with the most recent higher high formed on May 18 at $318.28 and the most recent confirmed higher low printed at the $280.46 level on May 15. If Nvidia breaks up from the flag formation later on Monday or on Tuesday, Monday’s low-of-day may serve as the next higher low within the pattern.
• The pullback on Friday and Monday allowed Nvidia’s relative strength index (RSI) to drop from about 73% to 69%. When a stock’s RSI nears or exceeds the 70% mark, it becomes overbought, which can be a sell signal for technical traders. Continued consolidation within the flag would help to further lower Nvidia’s RSI to give it strength for a possible move higher.
• Bearish traders want to see big bearish volume come in and break Nvidia down under the eight-day exponential moving average, which would negate the bull flag.
• Nvidia has resistance above at $314 and $332.19 and support below at $288 and $272.29.

Read Next: What's Going On With NVIDIA Stock Today

Photo courtesy of Nvidia.