key Takeaways

• Fueled by booming AI demand, Nvidia (NVDA) shares experienced a significant jump after the company’s quarterly revenue surpassed expectations.
• The stock’s breakout from a flag pattern coincided with a bullish golden cross formation, signaling potential further gains.
• Investors should monitor key resistance levels around $143, $150, and $160, while also keeping an eye on the crucial support level near $130.

SAN FRANCISCO – Shares of Nvidia (NVDA) surged in after-hours trading on Wednesday following the company’s proclamation that it had exceeded Wall Street’s revenue expectations for the fiscal first quarter.

The chipmaker reported a 69% increase in sales, reaching a record $44.06 billion. This surge is attributed to major technology companies increasing their investments in AI infrastructure. While profit was lower than anticipated due to a $4.5 billion charge related to restrictions on sales of its H20 chips to China, this charge was less than the previously anticipated $5.5 billion.

CEO Jensen Huang noted that global demand for Nvidia’s AI infrastructure remains “incredibly strong,” and anticipates accelerating demand for AI computing as AI agents become more widely adopted.

After a period of decline between January and early April, Nvidia’s stock has rebounded by 56% from last month’s low. This recovery is linked to easing trade tensions and a partnership with an AI subsidiary of Saudi Arabia‘s sovereign wealth fund.

The stock experienced a nearly 5% increase in after-hours trading, reaching just above $141. The last time the stock traded above $140 during regular trading hours was in February.

A technical analysis of Nvidia’s four-hour chart reveals key price levels that investors are likely to monitor closely.

Flag Pattern Breakout

Nvidia shares experienced a significant rally after breaking out from a pennant earlier in May. The stock then consolidated within a flag pattern above the 200-day moving average (MA).

The stock has recently broken out above the upper trendline of the flag pattern. This breakout has coincided with the 50-day moving average crossing above the 200-day MA, forming a bullish golden cross.

The stock’s upside momentum appears poised to continue. However, investors should monitor trading volume to confirm the upward movement. Share turnover had decreased leading up to the earnings announcement, indicating that investors were waiting on the sidelines.

Let’s examine three key overhead resistance areas on Nvidia’s chart and identify a support level to monitor during potential pullbacks.

Major Overhead Areas to watch

Investors should initially focus on the $143 level. The shares may encounter resistance near this level, which corresponds to the mid-February swing high and aligns with trading activity dating back to late October.

A close above this level could propel the shares to around $150. Investors who have averaged into the stock at lower prices may choose to lock in profits near this level, which aligns with several peaks formed between November and January, just below the stock’s record high.

To project a potential upside price target if the stock enters price revelation mode, investors can utilize the bars pattern tool. Applying this analysis to Nvidia’s chart involves taking the strong upward movement that preceded the flag pattern and repositioning it from the pattern’s breakout point. This projects a target of approximately $160, nearly 20% above Wednesday’s closing price.

Crucial Support Level Worth Monitoring

During pullbacks, the $130 level is worth monitoring. Investors may seek buying opportunities in this area,which aligns with a multi-month horizontal line connecting the bottom of the flag pattern with a series of peaks and troughs on the chart stretching back to August of the previous year.

Understanding Technical Analysis: A Brief Explainer

Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Unlike fundamental analysis, which attempts to evaluate a security’s intrinsic value based on financial statements and economic factors, technical analysis focuses on identifying patterns and trends in price charts to predict future price movements. Key tools used in technical analysis include moving averages, trendlines, and chart patterns like flags and pennants. These tools help investors identify potential entry and exit points for trades.

Moving averages smooth out price data to create a single flowing line, making it easier to identify the underlying trend. Trendlines connect a series of price points to show the direction in which a security’s price is moving. Chart patterns, such as the flag pattern discussed in the context of Nvidia, are formations on a price chart that suggest potential future price movements based on historical patterns. By understanding and applying these technical analysis tools,investors can gain insights into market sentiment and make more informed trading decisions.