Nvidia (NVDA) shares are in focus as the chip giant prepares to release its highly anticipated earnings report after Wednesday’s closing bell. The company, known for exceeding Wall Street expectations amid skyrocketing demand for its AI-focused products, is expected to report a robust 73% year-over-year increase in fourth-quarter revenue, along with a projected net income of $21.08 billion, up from $12.84 billion in the prior year.
Despite the stock being flat for the year, Nvidia has gained 12% this month as of Friday’s close, bolstered by bullish sentiment around AI investments from major tech hyperscalers. However, the stock saw a 4.1% decline to $134.43 on Friday, in line with a broader market sell-off. As Nvidia prepares to release its earnings, technical analysts are monitoring several crucial price levels for insight into potential market moves.
Technical Overview: Shares in Descending Channel
Nvidia’s stock has been trading within a descending channel since mid-December, with volumes gradually declining throughout the period. A bearish engulfing candlestick pattern formed on Friday, raising concerns of a possible downturn ahead of the earnings release. This same pattern preceded declines in the past when the stock hit its record high in early January.
Moreover, the relative strength index (RSI) has mirrored the price action, with lower highs since the beginning of the descending channel, indicating diminishing buying momentum.
Key Support Levels to Monitor
$130 Level: The first notable support is at around $130, where the shares may find some stability. This level aligns with a trendline linking the peak from August and the troughs formed in December and January. If Nvidia falls below this level, it could drop further to the next key support area.
$113 Level: If the price dips further, investors will be watching the $113 zone, which aligns with a low point from earlier in the month. This level also corresponds with a range of trading levels from May of the previous year, making it a key area to watch for potential buying opportunities.
$102 Level: In the event of a significant post-earnings drop, Nvidia may encounter support near the $102 level. This area is marked by the opening price of a breakaway gap in late May and price clusters near August and September lows.
Key Resistance Levels to Watch
$153 Level: On the upside, a breakout above the descending channel’s upper trendline could target the $153 resistance level. This area represents a key point of resistance, near Nvidia’s all-time high (ATH), and could provide a challenge for further upward movement.
$174 Target: Investors using the measured move technique anticipate that a breakout above the ATH could push the stock toward $174. By adding the width of the descending channel to the top trendline ($32 added to $142), analysts forecast a target nearly 30% higher than Friday’s closing price. This could prompt investors to take profits if the stock moves in this direction.
In conclusion, as Nvidia prepares for its earnings release, traders are closely watching these technical levels, which could signal significant price action depending on the company’s results.
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