Reversal Pattern in NVDA: A Temporary Cool Off or a Major Trend
In this article, I will discuss the head and shoulders reversal pattern observed in NVIDIA stock. Recently, the stock has experienced a significant uptrend, rising approximately 48% after the completion of a larger inverted head and shoulders pattern. However, recent price action on lower timeframes suggests a smaller head and shoulders pattern is forming, potentially indicating a temporary cool-off phase. I will analyze this pattern in-depth and explore its possible implications on NVDA's future price movements.
Larger Inverted Head and Shoulders Pattern
The larger inverted head and shoulders pattern that played out in NVDA's price action led to a substantial gain of approximately 48%. This bullish pattern indicated that buyers were in control and that the stock was poised for a significant upward move. As a result, NVDA saw a strong rally, reaching new highs for 2023.
Smaller Head and Shoulders Pattern
Despite the impressive gains, a smaller head and shoulders pattern has emerged on lower timeframes. This bearish pattern suggests that NVDA may experience a temporary cool-off phase in the coming weeks. Considering the rapid price increase, it is not unusual for a stock to undergo a short-term correction before continuing its uptrend.
Comparing NVDA with AAPL and TSLA
Similar to NVDA, other tech giants like Apple (AAPL) and Tesla (TSLA) have also performed exceptionally well in recent weeks. It is expected that these stocks, too, may face a temporary cool-off phase as the market undergoes a period of consolidation.
Possible Price Scenarios
As we analyze the head and shoulders pattern on NVDA, several price scenarios emerge:
The head and shoulders reversal pattern on NVDA's lower timeframes indicates a potential cooling off period for the stock. While it is natural for a stock to undergo a short-term correction after a strong rally, the bigger question remains whether this is a major trend shift or a temporary pullback before reaching new highs (for 2023). As investors and traders, it is crucial to closely monitor price action and key support levels in order to make informed decisions in the face of market uncertainty.
Larger Inverted Head and Shoulders Pattern
The larger inverted head and shoulders pattern that played out in NVDA's price action led to a substantial gain of approximately 48%. This bullish pattern indicated that buyers were in control and that the stock was poised for a significant upward move. As a result, NVDA saw a strong rally, reaching new highs for 2023.
Smaller Head and Shoulders Pattern
Despite the impressive gains, a smaller head and shoulders pattern has emerged on lower timeframes. This bearish pattern suggests that NVDA may experience a temporary cool-off phase in the coming weeks. Considering the rapid price increase, it is not unusual for a stock to undergo a short-term correction before continuing its uptrend.
Comparing NVDA with AAPL and TSLA
Similar to NVDA, other tech giants like Apple (AAPL) and Tesla (TSLA) have also performed exceptionally well in recent weeks. It is expected that these stocks, too, may face a temporary cool-off phase as the market undergoes a period of consolidation.
Possible Price Scenarios
As we analyze the head and shoulders pattern on NVDA, several price scenarios emerge:
- If NVDA breaks the $263 support level, the cool-off period indicated by the head and shoulders pattern may occur, and the stock could pull back to $238.
- A further decline to
215
would signal a potential buying opportunity for a bounce. However, given the strong upward trajectory from
138
to
280
, this scenario seems less likely.
- Our stretch goal for NVDA remains around
337
, suggesting that the stock could reach new highs in 2023 if the bullish momentum continues.
The head and shoulders reversal pattern on NVDA's lower timeframes indicates a potential cooling off period for the stock. While it is natural for a stock to undergo a short-term correction after a strong rally, the bigger question remains whether this is a major trend shift or a temporary pullback before reaching new highs (for 2023). As investors and traders, it is crucial to closely monitor price action and key support levels in order to make informed decisions in the face of market uncertainty.