NVIDIAUpdated NVDA nearing key support at 258-260
NVDA is one of strongest tech winners from 2020-2021. Long term and perhaps even in the intermediate term (6 months), it's probably right to remain very bullish on this semiconductor / chip stock. It's a play on the metaverse as well.
But with the selloffs continuing this week in the Nasdaq 100, NVDA is now nearing critical support levels at $258-260. If these levels are undercut, then NVDA likely will at likely continue downward within the next week or two and fill the gap at $233-239 (Oct. 25-26, 2021).
ADX / DMI shows NVDA is in a significant downtrend on the daily chart. The +DI crossed below the -DI around January 4, 2022. And the -DI has continued to trend above -DI, which signifies a downtrend continuing.
A reversal could occur, however, at the key support level from the Jan 10, 2022 low. But if a downward breakout occurs, this may work as a bearish play down to about $235. Try a put butterfly to keep risk small especially given that this stock is one of the strongest in firms in the US.
But with the selloffs continuing this week in the Nasdaq 100, NVDA is now nearing critical support levels at $258-260. If these levels are undercut, then NVDA likely will at likely continue downward within the next week or two and fill the gap at $233-239 (Oct. 25-26, 2021).
ADX / DMI shows NVDA is in a significant downtrend on the daily chart. The +DI crossed below the -DI around January 4, 2022. And the -DI has continued to trend above -DI, which signifies a downtrend continuing.
A reversal could occur, however, at the key support level from the Jan 10, 2022 low. But if a downward breakout occurs, this may work as a bearish play down to about $235. Try a put butterfly to keep risk small especially given that this stock is one of the strongest in firms in the US.
Note
The critical support level of $258-260 was violated today to the downside. NVDA should make progress toward filling the gap at $233-235.Note
NVDA closed very weakly today, well below my support levels $258-260. This strengthens the argument that a gap fill is imminent. I also ran a Fib extension from the all-time highs of $346 down to $271 and the ensuring bounce—the target using Fib extensions resulted in approx. $239. Full Disclosure: I don't currently have an open trade on NVDA, but I may consider one tomorrow. I would want a bounce into the mid 250s or so. I would choose a lower risk options trade expiring next week around January 26-28. For example, a call credit spread with strikes in the mid 250s (especially during a bounce tomorrow), or a put butterfly, with the middle strike near the target of $235. I'm not a financial advisor, so be sure to DYOR (Do your own research). Cheers!Note
NVDA is now more than halfway to my $233-239 target. After a rally in the first half of the trading session to approx. $255, NVDA undercut yesterdays lows and went into free fall. I would very much consider taking partial profits tomorrow esp. if the stock falls into the upper 230s.Trade closed: target reached
NVDA is in the target range of $233-239. Trading around $236 approximately 30 minutes after the open
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.