Nvidia Stock Poised for Gains After Breaching Key Levels

Nvidia Corporation (NVDA) recently closed above the $140 mark for the first time in 20 days, marking a notable shift in market sentiment. As it surpassed this level, traders are becoming increasingly bullish, with expectations that reaching $145 per share could lead to new highs.

Recent Developments: On an abbreviated trading session on Tuesday, Nvidia's stock climbed above its 50-day simple moving average, a significant technical indicator. The last time the shares traded above the $140 price point was on December 6. Peter DiCarlo, a quant trader, has suggested that if Nvidia successfully breaches the $145 threshold, the stock could rise to $170 within the first quarter of the year.

However, DiCarlo also cautions that failing to break through could indicate a “trap,” leading to a potential decline back to $120. This price would then be viewed as a confirmed bottom before another rise towards $170 later in Q2.

To validate this bullish outlook, the stock must firmly exceed the $145 level. If this resistance is broken, a rally to $170 seems plausible. Conversely, if the market forces a pullback, then a drop to $120 would suggest a need for further evaluation of the stock's trajectory.

In technical analysis, a chart shared by the founder of The Rock Trading Group indicates that for Nvidia to reach its daily trendline at $145, it should first break through the $141.87 level. Steven Strazza, director of research at All Star Charts, noted that momentum metrics show the stock is not in the overbought territory, signaling that the current bullish trend might continue.

Strazza further emphasized that the semiconductor sector is on the mend, with the 'magnificent seven' stocks, including Nvidia, hitting new all-time highs. He believes that the setup in Nvidia’s stock presents an ideal risk-reversal pattern, noted for its distinct support levels.

Technical Indicators: On Tuesday, Nvidia ended trading at $140.22, which is significantly above its eight-day ($133.85) and twenty-day ($137.17) simple moving averages. Additionally, it exceeded its 50-day average of $139.76 and a longer-term 200-day average at $116.91. This performance suggests a continued uptrend for the stock. Meanwhile, the relative strength index (RSI) stands at 54.12, indicating moderate strength without being overbought.

Future Implications: Recently, Jim Cramer raised concerns about a potential market correction for Nvidia, pointing to its rapid price increase without a significant catalyst or “crescendo moment.” His remarks came amid Nvidia’s ongoing antitrust investigation in China concerning its acquisition of Mellanox Technologies. Ming-Chi Kuo, an analyst at TF Securities, foresaw the ongoing investigation potentially extending for some time, similar to Qualcomm's previous antitrust cases.

Stock Performance: Nvidia's shares have increased by 4.84% over the past week and an impressive 191.09% since the start of the year. This performance outshines the Nasdaq 100 index, which saw a slight decline of 0.83% over the same period and an overall increase of 31.67% year-to-date.

Benzinga's analysis shows that Nvidia currently has a consensus price target of $170.56, with analysts expressing diverse views. The most optimistic target reached $220 from Rosenblatt in November 2024, while the most conservative stance set a target of $120. This represents a solid average price projection of $154.67 from firms like DA Davidson and Phillip Securities, indicating a potential upside of about 10.67% for investors.

Nvidia, Stocks, Market