NVDA shares are in a very strong uptrend, and since they broke the previous all-time high around $500 (yellow area), we have been navigating in unknown waters, since there are no more “previous tops” to act as resistance levels to guide us here. Since our previous study, NVDA has made many important movements, so let's update our idea. Remember, the link to my previous post is below this analysis, as usual.
In this case, there are a few things to remember that can help us. Firstly, the $ 600 is supposed to act as a resistance, not because it is a technical key point, but because it is a round number. More often than not, the market has a thing for round numbers, especially when it is making new highs, and apparently, NVDA is finding a resistance near the $600 (at least in the short-term).
Secondly, since NVDA broke the $500, it also triggered a Rectangle chart pattern seen on the weekly chart, as seen on the chart below:
The technical target of a Rectangle pattern is its height projected in the direction of the breakout (as evidenced by the red arrows). This takes is to the $626, approximately. Therefore, although NVDA is having a hard time breaking the psychological resistance at $600, in theory it still has more upside.
If this is a buy or not, it depends on your strategy and the time-frame you work, but I understand when I see people worried about it being overbought. If we use a few indicators, like RSI, we see that NVDA is around the 80s area, but there is a problem in determining whether a stock is overbought or oversold using only indicators.
On May 2023, NVDA went into overbought territory, as its RSI exploded and I saw many people worried about this. However, the price didn’t correct. In fact, it kept going up, while the RSI dropped, and this is one of the reasons why I don’t trade indicators – I trade price, but I use indicators sometimes as a tool to support my thesis, when I need more confirmation.
Therefore, as long as NVDA maintains the pattern on making higher highs/lows, trading above its support levels, the bull trend will persist. For now, there is no technical evidence, price action-wise, suggesting a pullback, and if a pullback occurs, we see many support levels to hold the price, as seen on the chart below, like the retracements, the 21 ema, and in the worst-case scenario, the $500 again.
I’ll keep you updated on this, so remember to follow me for more analysis like this, and like this idea to support me.