First and foremost, we never make chart-based trade recommendations in front of a major earnings announcement — whether for Nvidia (NVDA) or any other stock. However, charts are extremely helpful in outlining what’s at stake for AFTER the reaction. Often there are patterns, key moving averages, and support/resistance levels, etc. across multiple time frames that must hold for a stock’s technical condition to remain intact. As we’ll see across the next three charts, that’s very much the case for NVDA. Like many stocks, NVDA had done a very good job leveraging bullish patterns from the April lows. It has broken out of at least three bullish formations, each time reaching its respective upside target, with the most recent target having been achieved in October. On the flip side, the inability to extend that last rally — followed by lower highs — has produced a bearish formation. There isn’t much support beneath current levels, thus, the first crucial one to hold is in the 180-zone. A potential downside break would measure down toward roughly the 150 area. It’s also worth noting that the 200-day moving average is close to the 150-zone, too, having closed last night just below 152. The chart highlights the three prior instances when the stock reclaimed its 200-day line after previously struggling to get above it. In each case — 2013, 2019, and again in 2023 — once the stock moved back above the 200-DMA, it led to multiple years of strong upside follow-through. Most recently, the stock traded below the 200-day during the spring sell-off but recovered and has been trading back above the line again since early May. Thus, if NVDA now undercuts that line after spending only a short time above it, it would mark a very different behavior from those prior bullish cycles. This would suggest that momentum may be beginning to fade. Zooming even further out, looking at the monthly chart back to 2005, there have been three major bullish pattern breakouts. Once these breakouts occurred, they led to exceptionally strong and long-lasting advances. The recent move back above the prior 2024 all-time highs a few months ago can also be viewed as a long-term bullish pattern breakout. But similar to the 200-day moving average discussion, if that breakout level is undercut after only a short period of time above it, we would classify this attempt as a failed bullish formation. Prior attempts were all clearly successful, and notably, the breakout zone this time sits close to the 153-area. Coincidence or not, these charts make it abundantly clear how technically significant it will be for NVDA to continue trading above the 150-zone come tomorrow and going forward. We know one thing for sure: Volatility will be elevated in the days ahead — and so will the commentary around the company’s future. As investors, we need to absorb that information, but also recognize that sentiment, positioning, and broader market forces play major roles in price behavior. A stock can trade very differently from what its fundamentals might suggest — in both directions. That’s precisely why understanding the technical landscape is so valuable. — Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
