NVIDIA is poised to rebound from six-month low

Nvidia's stock price at Tuesday's trading session hit its lowest since September, falling below the level of 105. A 30% pullback from the January top should have attracted buyers sooner or later, which resulted in yesterday's upward rebound. The last two candles on the daily chart formed a bullish engulfing pattern, which gives a good opportunity for a full-fledged reversal of the downtrend. The confirmation of this scenario will be the rise of quotes above the mark of 115.

Most market participants agree with the opinion that Nvidia shares were overbought and needed a correction. Thus, Ben Reitzes from Melius Research lowered his target on these shares from $195 to $170. Nevertheless, he recommends investors to buy the stock amid its massive selloff. Current prices give a good opportunity for profitable opening of long positions.

According to YCharts, the price-to-earnings (P/E) ratio for Nvidia stock fell to 36. This ratio was at its lowest level since the launch of ChatGPT and the hype around artificial intelligence technology at the end of 2022. At the same time, the company's profits have jumped nearly 9 times in the last year. According to Reitzes, optimism about Nvidia will be supported next week, when the company's head Jensen Huang will present the development plan until 2027.

Nvidia may also take advantage by participating in a joint venture with other microchip designers in the United States. According to Reuters, US authorities offered Taiwan's TSMC to take over some of Intel's assets amid its large losses. TSMC can acquire a stake in certain Intel units, but no more than 50% because of its registration in Taiwan rather than the US. In this regard, TSMC intends to offer partner status in a joint venture to Nvidia, as well as AMD and Broadcom.

RSI and Stochastic indicators are close to the oversold zone and are ready for an upward reversal. The nearest upside target for Nvidia shares is the level of 115.

Consider the following trading strategy:

Buy Nvidia at the current price. Take profit – 115. Stop loss – 103.