Shares of Nvidia (NVDA - Get Report)   closed higher by 7.25% on Friday, ending the day at $159.56 after the graphics-chip maker posted better-than-expected earnings. 

That's good news for longtime bulls, as the company slowly but surely digs out of the supply glut that rocked its shares in fourth-quarter 2018.

While this is a step in the right direction, the technicals still have a ways to go before Nvidia is back on its bullish trajectory.

Earnings of $1.24 a share beat expectations by 9 cents, while revenue of $2.58 billion eked past estimates by $30 million. But revenue declined more than 17% year over year, while management's outlook for next quarter was below consensus estimates.

It was a good but not great quarter for Nvidia, and Friday's modest rally reflects as much.

While Nvidia's long-term trajectory is great -- as Jim Cramer has laid out many times in his bulletins for the Action Alerts PLUS member club -- the company is still working through some short-term headwinds,

Let's look at the charts and see if we can't find the ideal setup in Nvidia.

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Trading Nvidia Stock

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

The rally in Nvidia is giving a boost to Advanced Micro Devices (AMD - Get Report) and Intel (INTC - Get Report) , which so far today are up 5.1% and 1.75% respectively. It helps that the PowerShares QQQ ETF (QQQ - Get Report) is also up 1.6% on the day.

With Friday's rally, Nvidia stock is running into a confluence of major moving averages, with the 20-day, 50-day and 200-day moving averages all between $159 and $162.

If NVDA stock could clear these levels and close above them, the odds of a continued rally would improve. Further, it would be constructive to see these moving averages act as support moving forward.

Should the stock continue higher, the ~$175 level will be key. Not only must it contend with downtrend resistance (blue line), but this has been a key range level since October. That's emphasized by the various times it has acted as both support and resistance, as shown by the purple arrows in the charts.

If Nvidia can clear this area, though, the bulls could start to regain some longer-term momentum. In that event, a runup to the 38.2% retracement at $188 is in the cards, with a push to the 2019 highs near $193 also being in the realm of possibility.

There is downside risk, though.

Should Nvidia stock fail to push through its moving averages or should it do so and fail to find them as support, look to see that $148 to $150 holds as support.

Below opens up NVDA stock to more downside, with $132 being a possible low target.

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