Technical Analyst, Saxo Bank
Summary: NVidia is jumping 8% to 224 After Market following Earnings release. Will it resume uptrend or is there a reversal looming? What about the medium-term Shoulder-Head-Shoulder reversal pattern?
Nvidia is indicated to open higher around 224 (indicated by the dashed line on the chart) this afternoon following earnings release last night.
Despite the expected higher open Nvidia looks short-term a bit toppish as indicated by RSI Divergence. And with the bearish move over the past couple of days there is indication of a looming reversal in Nvidia but it is not yet confirmed. A down trend will be confirmed if buyers cannot keep momentum and Nvidia closes below yesterdays low at 204.21.
But, if buyers can lift Nvidia above 230.50 uptrend will be extended and the Inverted Shoulder-Head-Shoulder pattern will keep unfolding as illustrated on the weekly chart (and described in previous Nvidia analysis
There is strong resistance at around 230.50 and if this week ends on a negative note i.e., drawing a bearish weekly candle there is a top and reversal pattern in place. If that picture is drawn Nvidia could drop back down to test the Neckline around 186.
The 230.50 level is key for medium-term up- or downtrend outlook. Close above there is no strong resistance until around 283. 267 is the potential target derived from the inverted Shoulder-Head-Shoulder pattern illustrated by the two vertical arrows.
Failing to close above the scenario of NVidia testing the Neckline is likely to play out
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.