NVIDIA’s quarterly report may trigger correction toward $172

Forex market players have bought back most of the losses from NVIDIA’s drawdown last week. Ahead of today’s quarterly report, the share price is now approaching an all-time high, surpassing $180. However, it has failed to re-enter the four-month ascending channel, thereby increasing the risk of a full-fledged correction. A drop toward $172 per share could be the first warning sign. The 50-day exponential moving average (EMA50) near $167.5 may act as the next target.

NVIDIA's previous quarterly report, published in May, established a kind of pattern: initial price gains were followed by a strong pullback. Thus, shareholders appear more inclined to take profits than to fuel upward momentum. This scenario is also supported by the MACD indicator, which has approached negative territory for the first time since April. The closest targets for the correction will probably be last week’s lows and the EMA50. After that, sellers may rush toward the 23.6% Fibonacci retracement (161).

Following May’s report, NVIDIA’s board announced a potential $8 billion decline in earnings, triggered by China’s restrictions to sell the company’s chips. Bloomberg-surveyed analysts expect a more positive outcome, even though the firm’s projections for the next quarter could get even worse. The Chinese government is urging local producers to stop using NVIDIA’s products, citing concerns that they pose a threat to national security.

Meanwhile, Reuters experts continue to question how long the current excitement about artificial intelligence (AI) will last. They estimate that 95% of companies have yet to see any financial return from implementing AI in their business processes. This could shift investors' attention to other sectors of the stock market. This trend has already begun among ETFs, with an outflow of funds from tech stocks over the past two weeks in favor of securities from other sectors of the US economy.

Pay attention to the following trading strategy:

Selling NVIDIA in the range of $180–$185. Take profit: $172. Stop loss: $190.