Nvidia (NASDAQ: NVDA) investors will likely wait longer to see the stock mount a significant rally after facing bearish sentiments partly tied to the general market slowdown in recent months.
Notably, as of press time, Nvidia was trading at $106, having made minimal gains of about 0.1% in the past 24 hours. However, the stock is down over 2% on the monthly chart.
Nvidia’s bearish outlook
Trading expert TradingShot shared the bearish outlook in a TradingView post on September 10, pointing out that NVDA is experiencing a three-month pullback. Based on the chart observation, the pullback marks the first one on a monthly basis since late 2023. Therefore, the current trend should be considered a possible precursor to a more substantial downturn.
According to TradingShot, Nvidia’s current bearish sentiment is part of a continuation of a “channel up” pattern that the stock has been adhering to for almost a decade. Therefore, the current prices are retreating from the channel’s top through the pattern.
Notably, this top around the $116 mark acts as a critical resistance level, and failure to break above it could signal a deeper correction.
The expert further shared the technical indicators investors should watch out for. In this line, emphasis was placed on the one-month moving average convergence divergence (MACD), which depicts signals of a possible bearish cross.
The trend is worth noting, considering that in November 2021 and October 2018, the cross ushered in substantial downward movements. In both cases, the stock corrected back to the 1M MA50, which currently sits around $50 and has historically served as a bottom and support level.
The correction in November 2021 coincided almost precisely with the MACD bearish cross when NVDA’s price dropped from around $150 to the MA50. Similarly, in October 2018, a market top formed approximately 10 months after the Bearish Cross, with NVDA’s price dropping from around $70 to near $30.
“NVDIA Is disaster just ahead of us?<…> If this is a 3-year Cycle then in October or November (2024) we should really see the extent of the correction. If not then this might be another Mid-bull consolidation and we may have (roughly) another 10-12 months before this Cycle tops,” the expert noted.
Although Nvidia is attempting to recover, the stock is still dominated by bearish sentiment, partly triggered by company-specific fundamentals, such as fears over a possible antitrust investigation from the United States government. In this line, the stock has been attempting to avoid dropping below the crucial $100 support zone.
Amid this price movement, Finbold reported that Nvidia has also experienced significant capital swings and volatility over the past two months. Notably, this aspect has led to NVDA being equated to trading like a penny stock.
Wall Street remains bullish on Nvidia
Despite the current market sentiments, Wall Street analysts at TradingView maintain an overall bullish outlook over the next 12 months. The 62 analysts have offered a ‘strong buy’ rating for NVDA while forecasting an average price of $149. At the same time, they predict a high and low target of $200 and $90, respectively.
In summary, the bullish sentiment is partly based on the technology giant’s underlying fundamentals, especially the company’s dominance in the artificial intelligence (AI) sector. At the same time, it will be interesting to monitor how NVDA reacts to the overall economic outlook, especially with the upcoming Federal Reserve interest rate cut.
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Source: https://finbold.com/nvidia-nvda-stock-faces-disaster-ahead-according-to-historical-analysis/