NVDA: Approaching an All-Time High! Don't be Greedy.

BATS:NVDA   NVIDIA Corporation
NVDA has reached a critical resistance area, as evidenced by the yellow area in the chart above. Although a pullback would be plausible in this circumstance, there is no bearish chart structure suggesting a possible correction, and there is no top signal today.

Since it hit the previous support at $403.11 (red line), NVDA has rallied relentlessly. So it's important to keep in mind that if NVDA is about to correct, now would be the perfect time. We just need more confirmation.

Confirmation is important because we can’t possibly know the future. Remember, trading is reactive, not predictive. Let’s take the reaction observed on October 31 as an example (red circle).

On October 31, NVDA did a fantastic bullish reversal candlestick pattern, a Hammer, which acts as a bullish reversal roughly 60% of the time, according to Bulkowski’s studies (Encyclopedia of Candlestick Charts, p.348). This reaction has occurred right after NVDA hit the $403.11 support line, a critical support level that was making many investors nervous, as it was the neckline of a “possible” Head and Shoulders chart pattern, as seen in the weekly chart below.

However, as long as the price doesn’t close below the neckline, the pattern won’t be triggered, which is why I used the word “possible”. Investors who were betting on a breakout were frustrated by the Hammer pattern on the daily chart, which rejected the thesis of the H&S pattern.

As one of the greatest and most controversial traders that ever lived once said:

“To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate.”

- Jesse Lauriston Livermore.

Therefore, although NVDA is trading at a critical resistance level, near the all-time high, and it is having a hard time to break it, we don’t see any top signal confirming a pullback yet – but we might see one soon.

If NVDA corrects, we can expect that it would seek its next support levels, like the $476.09 or the 21 ema on the daily chart, and this wouldn't ruin the bull trend. In fact, it might be just another buying opportunity. I’ll keep you updated on this, so consider following me to keep in touch with my analysis.

Best regards.

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