NVDA stock has been a stock market leader throughout 2023 amid the AI boom. NVDA's share price rose by more than 200%, allowing NVidia's capitalization to exceed USD 1 trillion.
However, a pattern is forming on the chart, warning that NVDA's share price may decline. This is a diamond pattern A-B-C-D (determining the position of point D still takes time), which is formed from intersecting parallel lines of support and resistance. They are shown on the chart using ascending and descending channels.
Even though this instance of the pattern is far from the standard, it deserves attention.
Arguments confirming that the pattern can work:
→ in September, NVDA stock performed weaker than the S&P 500 index;
→ at the top of the diamond, there were high trading volumes, according to the NASDAQ exchange. The current price is below the levels at which high-volume transactions were recorded at the end of August. This can be interpreted as the fact that large market participants are taking profits (and/or even taking a short position);
→ the media is disseminating information that NVDA shares were sold by Berkshire (managed by Buffett) and the company's president Jen Huang herself — according to Yahoo Finance, on September 11, she sold about 30k shares.
Could the AI boom be winding down? According to investor Rob Arnott, Nvidia stock is a bubble. And if it bursts, it could trigger a collapse of the entire stock market.
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