NVIDIA’s quarterly report may send its shares down to $170

After reaching a new all-time high in late October, NVIDIA (NVDA) shares began to decline. Over the past few weeks, a descending triangle has formed on the daily chart. Buyer activity is waning, but the triangle's bottom at the $180 support level has not yet been broken. However, the company's quarterly report, due out after the end of today's trading session, could trigger this movement. The previous publication caused a 10% correction in late August, and this scenario could reoccur.

The MACD indicator is in a decline, preparing to enter negative territory for the first time since the start of fall. The RSI is also heading downward, but still has some room before it reaches the oversold zone. A top-to-bottom break of the 50-day exponential moving average (EMA50) provides further evidence that the correction will continue. If the price overcomes the EMA100, which is currently near $176.5, it would allow bears to fully seize the initiative. The next significant support level lies between $165 and $170.

There is little doubt that NVIDIA's financial results for the past quarter will be pretty strong. Bloomberg's consensus forecast predicts an impressive 55% increase in profits, with 90% of this growth coming from equipment for AI data centers. However, market participants may not be satisfied with these figures, especially since several major investors sold the firm's stock before the report was released.

Neither SoftBank representatives nor billionaire Peter Thiel commented on their reasons for exiting NVIDIA's capital. But considering the shares' exceptional growth of 1,000% since the launch of ChatGPT three years ago, profit-taking appears to be justified. The company's revenues, despite the most optimistic scenarios, will not grow fast enough to warrant such a dramatic increase in the price of its securities. The 15% pullback from October's high is still insufficient to make the NVIDIA shares attractive for buying again.

Consider the following trading strategy:

Sell NVDA at the current price. Take profit 1: $176.5. Take profit 2: $170. Stop loss: $187.