Wednesday, 1 March 2017

NVidia (NVDA) Possible Support Targets

NVDA's bull run is so strong that it takes more than 1 bearish drivers to give it some meaningful corrections. And then we have not 1, but 4 bearish forces - both technical and fundamental - to finally give it that long awaited correction, for the benefit of those who want to get into the stock at a lower level. Patience pays.

Nividia (NVDA) Possible Supports
Nividia (NVDA) with Possible Supports. Chart as of 28 Feb 2017.
(Click photo to enlarge)

The bearish drivers are:

1.  Negative divergences in not 1, but 3 technical indicators (probably more than 3, but these are my fave ones). These divergences went back as far as Nov 2016.
2.  Double tops chart formation. $120 level proves to be a tough nut to crack.
3.  The bull run is quite stretched (that could be said about the whole semi sector SOXX).
4.  Negative news and analyst downgrades.

Because of its strong bullish sentiment, any one of the 4 bearish drivers alone would probably wouldn't slow down its unrelenting rise. But if you have 4 bearish forces attacking it from 4 fronts, the bulls will be much more likely to get defeated.

The question now is, where is the price heading?

I could see 3 very logical supports.

S1 = $90.   This falls on the uptrend line that goes back all the way to the middle of 2016 when the stock went parabolic. $90 is also happens to be the target price of one of the analyst downgrade.

S2 = $80.  This support coincides with the upper side of the price gap channel (indicated by purple bar / channel). This also nicely lines up with the 38.2% Fib retracement.

S3 = $70.  This support coincides with the lower side of the price gap channel. This also nicely lines up with the 200DMA.

I think $80ish is the most likely. $70 provides the strongest support. $70 seems like a low target, and i don't it's likely to get there, but one analyst puts a $38 as their target price.

Will find out soon enough.

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