Shares Dropped Nearly 7% in Extended Trading on Wednesday
Key Takeaways
Nvidia ( NVDA ) shares tumbled in extended trading on Wednesday after the artificial intelligence (AI) darling's quarterly earnings topped expectations but left investors disappointed as the latest numbers pointed to slowing growth . The chipmaker has wowed Wall Street in recent quarters with blowout earnings reports fueled by insatiable demand for AI, setting a high bar for the latest earnings release .
Although Nvidia shares are up around 150% since the start of the year, they have seen significant price swings in recent months, falling as much as 33% between July and August before staging a head-turning recovery ahead of earnings to trade just 11% below their record high through Wednesday’s close.
Nvidia shares dropped 6.9% to $116.95 in after-hours trading Wednesday.
Below, we take a closer look at Nvidia’s chart and use technical analysis to point out key levels to watch out for amid post-earnings price movement.
Projected Breakdown From Rectangle Formation
After staging an impressive recovery from this month’s low, Nvidia shares have consolidated within a narrow rectangle formation over the past seven trading sessions ahead of the company's highly anticipated report. Although volume remains relatively low, share turnover has increased this week, indicating portfolio rebalancing before the quarterly results.
Thursday’s projected earnings-driven drop sees the shares poised to break down below the recent rectangle and 50-day moving average , a move that could trigger further weakness in the stock.
Looking ahead, investors should monitor four key price levels that may come into play if the AI darling's shares continue to undergo a post-earnings slide.
Nvidia Price Levels to Watch
The first sits around $116. This area could provide initial support near a trendline connecting the May peak and the high of a minor countertrend relief rally that occurred in early August.
A move below this level may see the shares fall to the $107 area, a location on the chart where buyers may seek entry points near a series of closely aligned trading levels in the stock between May and August.
Further selling could lead to a retest of the key $97 level, where Nvidia shares would likely encounter considerable support near twin March peaks , the first of which marked a prior record high in the stock.
Finally, it’s worth keeping an eye on the $91 area, a lower price target predicted when extracting the down trending bars pattern from July to August and positioning it from the high of the recent rectangle formation. If such a move were to play out, it would confirm a descending channel in the stock and could see a possible retest of this month’s low.
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