NVIDIA Rounding Top: Bearish Swings Q1 2025TA
Nvidia demonstrated strong growth throughout 2024. However, this year, it has shown rather a poor performance. When an uptrend started to weaken, it gave off subtle signals before a full reversal happened on the horizon. One of the first clues is that the highs collectively begin to appear curved compared with initial rough growth. This reflects the loss of aggressive bullish intent, showing hesitation and vulnerability to a reversal.
The price still makes higher highs, but the incremental gain between each peak shrinks. This declining magnitude in price advancement suggests that buyers are gradually losing strength with each move. These shallow bullish waves often get sold into quickly, showing early distribution behavior.
Simultaneously, it takes longer time for price to reach each successive high . When higher highs occur at reduced frequency, the rally phases become stretched out. This indicates buyers are struggling, and sellers are gaining time-based control.
Extended Rounding Top Pattern
Price crosses above the rounding top
Indicates a failed reversal and potential bullish breakout. Suggests renewed buying strength and possible trend continuation. I'd recommend using confirmation tools like volume spikes and momentum indicators which are essential to validate the breakout.
Price reaches the rounding top and stalls or reverses
Confirms the bearish reversal signal of the pattern. Acts as a strong resistance zone, often leading to a downtrend. Alongside with fibs, it can be used as a cue to take profits, exit long trades, or enter short positions.
FUNDAMENTALS
Catalysts of Bearish Swings
A transition phase characterized by a series of sharp bearish swings, marked by a sequence of Lower Highs and Lower Lows, shaping a well-defined downward channel.
Drop #1: ATH → Higher Low
(Early January 2025)
After Nvidia’s euphoric 2024 AI hype rally, it was a matter of time as some institutional Investors locked in profits, causing initial drop.
Valuation metrics (P/E; P/S) reached extremes creating grounds for a correction.
The Fed’s January meeting hinted at fewer rate cuts than the market expected. Rising Treasury yields pressured tech stocks.
The U.S. government has imposed strict export controls on advanced semiconductors, AI chips and related technology to China.
Drop #2: Lower High → Lower Low
(Late January to February 2025)
While Nvidia beat Q4 earnings expectations, its forward guidance disappointed. Management cited softening data center orders and consumer GPU inventory corrections.
Concerns about potential erosion in gross margins due to increasing costs and competitive pricing pressure from AMD and Intel.
AI infrastructure spending was plateauing faster than expected, leading to re-ratings across the sector.
Drop #3: Second Lower High → Second Lower Low
(Mid to Late February through Early March 2025)
Several investment banks downgraded semiconductor stocks, including Nvidia, amid fears of a cyclical slowdown and oversupply risks in H2 2025.
In early March, broader indices dropped due to hot inflation prints in February. Fed’s stance during testimony to Congress indicated a higher interest rate outlook.
Reports emerged about delays in next-gen chip production due to yield issues at TSMC and logistics constraints, fueling investor anxiety.
Renewed export control tightening and U.S.-China friction were again cited as major concerns earlier this year. These concerns were part of the bearish narrative during Nvidia’s downward structure, especially during Drop #1 and Drop #2 where investors began pricing in geopolitical and regulatory headwinds.
Events & Economic catalysts to monitor (before buying heavy):
Nvidia Earnings Q1 2025 Mid to Late May 2025
Why it matters: Forward guidance, Data Center/AI segment growth, margin updates, and China sales commentary will heavily impact sentiment and trend direction.
U.S. CPI (Inflation) Reports April 10, 2025 (March CPI)
Remember: Hot inflation = higher rate expectations → tech sector sell-off. Watch for YoY core CPI trends.
U.S. Jobs Report (NFP) April 4, 2025
Keep in mind: Strong labor = sticky inflation = Fed hawkishness → higher discount rates on growth stocks.
Semiconductor Industry Conferences
・NVIDIA GTC (GPU Technology Conference) – usually held Spring or Fall
・Semicon West 2025 – typically July
Track the progress: Product launches, AI roadmaps, new partnerships, and forward tech strategy updates often revealed.
