Do you remember when NVDA stock had a very high StockCharts Technical Rank (SCTR) score for most of 2023 and 2024? If not, that’s OK. You’ll remember when you look at the chart of NVDA later in this article.
The chip company we know so well — NVIDIA Corp. (NVDA) — has seen its share of euphoria and panic. NVDA’s stock price gained 239% in 2023 and 171.24% in 2024. Mega tech companies plan to increase their AI spend in 2024, which could boost NVDA’s stock price, given NVDA’s dominance in AI chips. But this doesn’t make the stock price immune from selloffs. We saw how the news on January 27 about DeepSeek’s ability to build AI models more cost-effectively sent investors scrambling to sell off NVDA shares.
The NVDA stock price fall was the biggest one-day loss the stock market has seen as of this writing. This price action gave investors a dose of reality — even the best-performing stock can go through a steep plunge when you least expect it. Fortunately, investors overcame the initial DeepSeek scare and NVDA’s stock price is on its path to recovery.
Let’s walk through NVDA’s stock price charts, starting with the weekly chart (see chart below).
FIGURE 1. WEEKLY CHART OF NVDA STOCK. It’s been in a steady uptrend since the end of 2022. After the recent pullback to its 50-week simple moving average, the stock has been struggling.Chart source: StockCharts.com. For educational purposes.
After the pullback from November 2021 to October 2022, the stock has been on a relatively sustained uptrend. At the end of January 2023, NVDA’s SCTR score crossed above 76, a threshold level I use to identify a stock that’s gaining technical strength. For the most part, the SCTR score remained above this threshold until the end of 2024.
The SCTR score is now inching toward the 76 level, and NVDA stock’s price is at its 21-week exponential moving average (EMA).
Let’s see what the daily chart is displaying.
FIGURE 2. DAILY CHART OF NVDA STOCK. After the massive fall on January 27, NVDA’s stock is showing signs of recovery. It still needs more upside momentum to push the stock price higher. However, if the stock price moves to the downside, there are clear support levels to monitor.Chart source: StockCharts.com. For educational purposes.
When NVDA’s stock price fell on January 27, the close was below its 200-day simple moving average (SMA), which caused a big drop in the stock’s SCTR score. Even after recovering from the fall, the stock price again dipped below its 200-day SMA on February 3. The stock is now on its way to filling the DeepSeek down gap.
The SCTR score is less than 70 and looks like it’s stalling. The stock price is between the 21-day EMA and 50-day simple moving average (SMA). Both are relatively flat. The stock needs more momentum to break through the resistance of the SMA.
Other criteria to consider are:
- The rate of change (ROC) is still in negative territory.
- The percentage price oscillator (PPO) has just crossed above its signal line. The PPO histogram is just above the zero line.
- The relative strength index (RSI) is just above the 50 line.
- Volume is still tepid.
Overall, NVDA’s stock price is showing hesitancy and could move in either direction. A push to the upside would move the stock price higher, hitting its previous highs. But the momentum behind it has to be strong.
If the stock price falls, watch the following support levels:
- The 21-day EMA.
- Price action between $127 and $129.
- Price action between $113 and $115.
A reversal from a pullback with follow-through is a great place to accumulate positions. Make sure to monitor the chart and get a feel for when the bulls become more dominant.
The Bottom Line
NVDA’s stock price movement is leaning toward the downside, which isn’t unusual in an uncertain investment environment. You’re better off looking at the overall trend and applying objective analytical tools, such as the SCTR Reports and technical indicators, in order to identify strength and momentum in a specific stock, exchange-traded fund, or index. Make your investment decisions based on what the charts and tools are indicating; not on the noise you hear.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.