Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
You can access all of our platforms from a single Saxo account.
Technical Update - Nvidia: Buyers running out of steam? Or potential to much higher price levels? See here how and why?
3 minutes to read
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: Nvidia deep dive. Short- medium- and longer term.
A short-term correction could unfold but if Nvidia is staying above 661.60 the uptrend is intact.
Medium- to longer term some indicators suggesting there could still be further 30% upside
Nvidia opened almost 3% higher Friday spiking up to +5% but after just 10 min of trading sellers took control selling through the majority of the trading session so Nvidia closed just 0.35% higher. Traded volume was almost as big as the previous day after Earnings release. That could be a sign of uptrend exhaustion short-term
If Nvidia is experiencing another down day to day and next couple of days a correction could be unfolding.
A daily close below 742,20 could fuel further selling. Possibly down to support at around 661.60
See link at then end of this article for more detailed explanation of RSI divergence
Medium-term on the weekly chart the potential top and reversal pattern described in last week’s update was demolished.
The rising traded volume is supporting the uptrend but there is still some divergence on the RSI suggesting warning about a possible trend exhaustion.However, there is not yet a top and reversal pattern unfolding. A close below 661.60 is likely to change that resulting in a larger correction, and the trend is still up (higher highs and higher lows) and until that scenario is changing there is potential for higher price levels
On the monthly chart Nvidia reached spot on the 3.00 projection (300%) of the 2022 correction, and overshooting the 1.00 extension of the 2023 bullish trend at 786.83.
If Nvidia keeps climbing it could reach 1.382 Extension at 937.54
Depending on the size of a possible correction it could give it further energy to higher levels IF the share price is not forming a top and reversal pattern in coming weeks and months.
The declining traded volume is a warning sign of weakening of the bullish trend. Declining volume is an illustration of an imbalance BUT that can go on for quite some time as Nvidia seems to be hit with FOMO - Fear Of Missing Out.That alone can drive a stock higher – few sellers wants higher prices for their Nvidia shares and investors not owning any Nvidia wants to get on board hunting the price higher. Eventually that has to break, it is just a question of time
Another tool based on Point & Figure charting and Fibonacci (yes, it is for the nerds) and on buying and selling thrust i.e., buying push and selling corrections. Developed by David Linton, Updata Analytics. That indicator is pointing to much higher Nvidia levels. The tool is available on that platform only.
As can be seen from the below chart Nvidia has reached all price targets given including the latest one at 779. New target is now at 1,072 i.e., approx. 30% higher. Whether it will be reached remains to be seen.
Please note: This is NOT a recommendation to buy Invidia and it is not a guarantee that this price target will be reached!
And it does not say anything about a potential correction. It is a potential price target tool only
Description of the following Indicators and how I used them - click the link:
Volume
Moving Averages
RSI - and divergence
Ichomokiu Cloud
Technical analysis studies and indicators
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
Bonds: What to do until inflation stabilises
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
FX: Risk-on currencies to surge against havens
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.
-
Commodities: Energy and grains in focus as metals pause
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.