On 10 July, we noted strong selling pressure above the $130 per share level. Since then, the price has dropped by approximately 22%. Losing more than a fifth of its market value seems like a serious issue, but it’s not as bad as it might appear, especially with emotions running high amid fears of a potential US recession.

Technical analysis of the NVDA chart today shows that:

→ The price is forming an upward trend (shown in blue). The false breakout of the upper boundary on 20 June mirrors the false breakout of the lower boundary of the channel on 5 August (as indicated by the arrows).

→ It’s important to focus on the interaction between the price and the psychological level of $100. On 5 August, when the price dropped below the lower boundary of the channel, it fell below this round number. However, by the end of the week, NVDA's price had recovered (along with many other stocks in the US market). It’s reasonable to assume that retail traders, who had earlier in 2024 bought NVDA shares on margin due to the prospects of AI development, rushed to liquidate their long positions when they saw the price dip below $100.

Thus, the area around the psychological level of $100, reinforced by the lower boundary of the channel, proved to be an important support last week – from the 5 August low, the price has already risen by 15%, approaching the $116 level. This could act as resistance, as it represents the 50% retracement from the decline between the arrows.

Meanwhile, forecasts remain positive. According to a TipRanks survey of 41 Wall Street analysts, the average price target for NVDA is $144 within 12 months. Is this realistic?

It’s possible that by early autumn, the bulls could shift market sentiment in their favour – much will depend on the fundamental backdrop. Nvidia’s Q2 report is due on 28 August. Recall that after the Q1 report, which was published on 22 May, NVDA's price surged past the $100 psychological resistance with strong momentum. It’s likely that on 28 August, this level will continue to serve as support.

Read analytical NVDA price forecasts for 2024 and beyond.

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