Market Focus: After three consecutive declines, where will NVIDIA fall to?

NVIDIA's stock price has fallen for three consecutive days, with a total market value evaporating by $430 billion. Where is the next support level?

Analysts have provided predictions from a technical analysis perspective: $115 and $100.

Buff Dormeier, Chief Technical Analyst at Kingsview Partners, believes that the sudden drop in NVIDIA's stock price may indicate some investors taking profits early. He said, "After experiencing the news of NVIDIA's 1-for-10 stock split last month and reaching the top market value this month, the continuous decline in NVIDIA's stock price is worrying." Dormeier believes that NVIDIA's short-term support level is around $115, with the next important support level at $100.

Since last Tuesday when NVIDIA briefly became the world's largest company by market value, as of Monday's close, NVIDIA's closing price was $118.1, down nearly 16% from its peak of $140. This also marks NVIDIA's first technical pullback since April, defined as a stock price decline of 10% or more from recent highs.

According to Dormeier's technical analysis viewpoint, if NVIDIA's stock price falls to around $115, it will encounter a key Fibonacci retracement level, which is also the nearest short-term support level. Fibonacci retracement, as an indicator in technical analysis, although not 100% accurate, can provide investors with a reference idea.

Despite the recent consecutive declines, NVIDIA's long-term trend remains stable

Benefiting from the boom in artificial intelligence, NVIDIA's GPUs have been continuously sought after in the market, leading to a soaring stock price this year. From the financial report released on May 22 and the announcement of the stock split, to reaching a historical high on June 18, NVIDIA's stock price rose by 43%, with a market value reaching $3.34 trillion, surpassing Microsoft's $3.32 trillion. Although NVIDIA has fallen for 3 consecutive days, the cumulative increase for this year is still 139%, and the long-term upward trend remains stable.

Ari Wald, Head of Technical Analysis at Oppenheimer, pointed out that for NVIDIA, the long-term trend is more important than any specific stock price point. Currently, NVIDIA's long-term uptrend remains strong, with the stock price still well above the 50-day moving average around $100 and the 100-day moving average of $92.

Wald stated, "Generally, the formation of a major price top requires a process, with several rounds of buying and selling, followed by a gradual decline in price momentum, and then key levels will be breached. We have not yet seen these signs."

Bruce Zaro, Chief Technical Strategist at Granite Wealth Management, also noted, "For stocks like NVIDIA that are in an uptrend, breaking the first support level at $115 is not a big issue, but falling below $100 would be concerning."Zaro said: "(Breaking 100) may not have a long-term impact, but it means that investors should be more patient, especially in periods when the market may experience severe volatility and declines, as there are still the upcoming U.S. presidential election and the Federal Reserve's interest rate decisions to help investors make further decisions."