Nvidia Flies In Blue Skies Amid Reports Of Investment In Arm IPO: A Technical Analysis

NVIDIA Corporation NVDA gapped up slightly to start Thursday's trading session, breaking up from a rising channel pattern on the daily chart.

The move higher was in continuation after Nvidia rose over 4% Wednesday following reports indicating the company will make a long-term investment in the Arm IPO, which is set to take place in September.

When Nvidia spiked higher Thursday, the stock negated a possible bearish double top pattern at the $439.90 mark and confirmed its uptrend remains intact.

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An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.

The higher highs indicate the bulls are in control, while the intermittent higher lows indicate consolidation periods.

Traders can use moving averages to help identify an uptrend, with rising lower time frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend.

The Nvidia Chart: Nvidia’s most recent higher high within the uptrend was formed on July 5 at $431.77 and the most recent higher low was printed at $416.49 on July 10. On Thursday, Nvidia was climbing to a new all-time high, but hasn’t yet indicated the next local top has occurred.

• Should Nvidia close the trading session with an upper wick, the stock will print a shooting star candlestick, which could indicate lower prices will come on Friday. If that happens, the stock will fall back into the rising channel pattern.
• In the event that Nvidia closes Thursday near the high-of-day, the stock will print a bullish kicker candlestick, which could suggest higher prices are in the cards. If that happens, the stock is likely to form a bearish reversal candlestick over the next few trading days.
• The local top is likely to come soon because Nvidia’s relative strength index (RSI) is measuring in at about 70%. When a stock’s RSI reaches or exceeds that level, it becomes overbought, which can be a sell signal for technical traders.
• Nvidia has resistance above at the psychologically important $450 and $460 areas and support below at $439.90 and $419.38.