Coming into Thursday, the Santa Clara, Calif., chipmaker was riding a seven-week win streak, rallying in 25 of 33 sessions amid that run. The streak isn’t over, but Thursday’s dip may present an opportunity.
For its part, Nvidia touched an all-time high in the session, although it closed lower on the day.
Thursday morning was a different story. The indexes opened lower, about 1.5%, while Nvidia gave patient bulls a nice buying opportunity. Let’s take a look at the charts.
Trading Nvidia Stock
After a massive rally like the one we’ve seen with Nvidia, traders have to be careful.
Specifically, the shares rose went from sub-$550 to almost $850 amid the current run. Further, the stock hit the 261.8% extension from its most recent range.
Why the caution on such a big winner? Because Nvidia has rallied so far so fast, and a deeper unwind wouldn’t be surprising. That’s particularly true if we get a deeper correction in the indexes.
That said, Thursday’s dip is a buying opportunity for more aggressive traders.
Nvidia stock is testing down into the 10-day moving average for the second time in as many months.
This stock has been incredibly strong, and it’s hard not to be a buyer on this type of pullback.
On the upside, I’m looking for a gap-fill near $813. Above that opens the $825-plus area, with resistance in play between $833 and $835.
If Nvidia stock can clear that area, it opens the $850 mark, with the 261.8% extension all the way up near $860.
As far as short-term targets go, that’s about as much as one could ask for.
On the downside, a break of Thursday’s low and a close below the 10-day moving average could put the 21-day moving average in play.
At the risk of sounding like a broken record, the 21-day also seems like a reasonable dip-buying level should we get there.