Shares of Nvidia (NVDA - Get Report)  were muted on midday trading Friday, rising slightly to $160.31 despite the company reporting an earnings beat, but then falling by nearly 2.3% to close at $156.53.

The midday reaction was rather dull considering what a big mover Nvidia stock tends to be, although long-time shareholders are likely content with Friday's price action. After all, many investors are still in a state of caution with the chipmaker ever since shares fell 50% from peak to trough in the fourth quarter.

Since then, it's been a slow but steady recovery as worries over chip demand continue to hang over the company. Intel's (INTC - Get Report) recent report didn't help matters, although Advanced Micro Devices (AMD - Get Report) has been holding steady over the past few weeks.

Many are wondering what's next for Nvidia. The company beat on earnings and revenue estimates as gaming revenue recovered. Initially, this led to a 6% rally in after-hours trading. However, these gains have evaporated on Friday, as management didn't provide a full-year outlook and as worries linger about its datacenter segment.

That's led to the muted response we saw during much of Friday (there was also a slight rebound in after-hours trading to $157). Bears are arguing that Nvidia stock's failure to rally indicates poor price action. Bulls counter by saying that it's holding up despite less-than-desirable news. Who's right?

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Trading Nvidia Stock

Daily chart of Nvidia stock.
Daily chart of Nvidia stock.

Given how hard Nvidia stock was hit in the fourth quarter, some type of rebound was warranted in the first quarter. It's a good thing shares went to $160 from $190 ahead of the report, otherwise we would've likely seen a much larger correction on Friday.

With the pullback in place though, perhaps investors have already priced in a mixed quarter such as this. The worry now shifts from what's happened to Nvidia to what the company will do over the next few quarters. Management not providing its full-year outlook clouds that future though and adds to the uncertainty. As many investors know, Wall Street doesn't like uncertainty.

Given that management has been less than stellar on its forecasting abilities over the past few quarters, NVDA stock is no longer worthy of receiving benefit-of-the-doubt treatment. Fortunately though, Nvidia stock has been basing in this area, between $157 and $160, with the 50% retracement for the Q4 to Q1 range near $158.80. That gives us a level to measure against. Below recent support opens the door down to the mid-$140s.

A break above opens up the possibility of a run to the backside of prior uptrend support and the 20-day moving average currently near $170. Above that and Nvidia stock will have to contend with the 50-day, which was acting as support prior to its failure earlier this month. Will it now act as resistance? We'll see.

The highs near $193.50 are the eventual upside target, which was essentially the gap fill from back in November. Don't forget there's also the declining 200-day moving average to push through.  

Nvidia is a great company for the long term, but it has its fair share of headwinds. That has translated to a rocky technical outlook and there's plenty of work to do before the charts look strong again.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.