On Friday, Nvidia stock closed lower by 2.4% at $172.69 as concerns over the trade war rattle investors ahead of the weekend. It doesn't help that it's a quadruple witching day, one of four Fridays per year that can create excess volatility in the stock market.
As it relates to Nvidia, both Intel (INTC - Get Report) and Advanced Micro Devices (AMD - Get Report) have been struggling over the past few sessions as well. Is it a sign that Nvidia stock has more downside to come or is it an opportunity for investors to get long?
Let's look at the charts.
Trading Nvidia Stock
On Friday, Nvidia stock lost both uptrend support and the 20-day moving average. Should the selling continue, bulls would love to see the stock hold its 50-day or 200-day moving average.
Further, the 78.6% retracement comes into play just under $160. If Nvidia can hold up above one or several of these levels, it will add to the bullish case.
As for it breaking below trend support (blue line), keep in mind this has been the trend -- no pun intended. The stock has a history of going on a short-term rally as investors buy the dips. Eventually, though, that rally ends, uptrend support breaks and NVDA stock falls.
But -- and this is an important but -- each time these uptrends fail and selling ensues, Nvidia stock puts in a higher low. That's a bullish technical development and while it's been almost a year since the stock's fateful drop in 2018, these incremental technical improvements on the charts add up over time.
That's why the must-hold level is ~$147. Below that and the higher lows theme (shown in purple arrows) will end.
On the upside, investors need to see Nvidia stock reclaim the 61.8% retracement at $188. Above it puts the 2019 highs in play at $193.06 and above that, the 50% retracement near $208. If NVDA can reclaim the 20-day moving average, nimble bulls may consider a short-term long position. Otherwise, consider waiting for a larger decline.