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All eyes are on Nvidia as the stock experiences a volatile sell-off following its second-quarter earnings report last Wednesday.
With the stock dropping as much as 16% over the past week despite beating earnings estimates, investors are grasping for where and when the stock might find its bottom.
Business Insider spoke with technical analysts who have a knack for reading charts to gauge their observations on the current price action of Nvidia and where the stock may be headed next.
Analysts say there are two key lines in the sand for Nvidia stock that could make or break its long-running market leadership.
The first is the psychological $100 level, followed by the all-important 200-day moving average, which sits just below $90. That level also aligns with its low made on August 5.
Shares of Nvidia traded in a range of $104-$110 on Wednesday.
"The 200-day average currently comes in around $89 and converges with the August 5th intra-day low, too. So for us, nothing has changed to the stock's long-term trend above this support," Ari Wald, technical analyst at Oppenheimer, told Business Insider.
Wald said he wasn't necessarily surprised by the recent weakness in Nvidia shares, given that September is a seasonally weak time for the broader market.
If shares of Nvidia approach their rising 200-day moving average, which they have been above since January 2023, Wald would view it as "an opportunity to buy the stock's intact uptrend."
For Fairlead Strategies' founder Katie Stockton, shares of Nvidia appear tired and could be moving sideways for some time.
"NVDA shows signs of intermediate-term and long-term upside exhaustion from an overbought/oversold perspective. We expect the stock to stay in its digestive phase for a few months," Fairlead Strategies said.
If Nvidia shares manage to decisively trade above their key support level of around $90, the stock could eventually target the resistance level of $130 and beyond, according to Stockton.
That represents potential upside of at least 19% from current levels.
LPL technical strategist Adam Turnquist told Business Insider that shares of Nvidia have made some minor infractions in recent weeks.
The stock failed to reach the July highs in August, dropping below its 20-day and 50-day moving averages.
"Volume and momentum indicators point to more downside risk ahead, with support setting up near $100 (psychological level and August lows), $95 (March highs), and near the $88.50-$90.69 range (200-day moving average / August intraday low)," Turnquist explained to Business Insider.
A similar story is playing out in the Nvidia chart relative to the S&P 500, and there could be danger ahead if Nvidia breaks below its August intraday low of $90.69, according to Turnquist.
"A break below the August lows on the ratio chart would suggest NVDA's market leadership status may be lost," Turnquist said.
Here's a technical chart of Nvidia with the various price levels to watch going forward.
TC2000; Markets Insider
