Nvidia Stock Under Pressure: Can It Bounce Back From Key Support Levels?
Nvidia Stock – Shares of Nvidia (NVDA) plunged on Monday as concerns grew that a new, cost-efficient AI model developed by Chinese startup DeepSeek could potentially reduce big tech companies’ investment in Nvidia’s premium AI offerings. Over the past few years, major companies like Microsoft (MSFT), Alphabet (GOOG)(GOOGL), and Amazon (AMZN) have spent billions purchasing Nvidia’s AI platforms to enhance their infrastructure and meet surging demand for AI technologies. This massive spending spree has helped propel Nvidia into one of the world’s most valuable companies, but the advent of cheaper AI alternatives now threatens to disrupt this lucrative market.
The 17% drop in Nvidia shares on Monday, bringing the price down to $118.58, resulted in a nearly $600 billion loss in market capitalization. Despite this sharp decline, Nvidia’s stock has still nearly doubled in the past 12 months and has skyrocketed more than eight-fold since the launch of OpenAI’s ChatGPT in November 2022.
Technical Analysis: Key Levels to Watch After Monday’s Drop
Following the significant selloff, it’s essential to take a closer look at Nvidia’s technical chart to identify critical price levels that investors should be monitoring. Monday’s sharp drop caused Nvidia shares to break below a seven-month rising wedge, signaling a potential continuation of the downtrend. The stock also closed below its 200-day moving average (MA), which is a critical indicator of long-term price momentum.
Importantly, the massive selloff occurred on the highest daily trading volume seen since May, suggesting that larger market participants are engaging in significant portfolio rebalancing. With these factors in mind, let’s dive into the crucial support levels to watch, as well as a key resistance area that could signal a recovery if breached.
Key Support Levels to Watch
- $102 Support Level
The first key support level to keep an eye on is $102. This level is notable because it aligns with the late-May breakaway gap, which represents a previous price movement where the stock saw a sharp rise. Additionally, this level coincides with a trough formed in early September. If Nvidia shares drop below $102, it could signal further downside, and investors may begin to eye the next level of support. - $96 Support Level
A close below the $102 level could lead to a potential decline toward the $96 mark. This price range sits around 36% below Monday’s closing price, which could attract buyers looking for bargains. The $96 level aligns with two significant historical price points—the March twin peaks and the early-August selloff low—making it a potential area for investors to seek buying opportunities if the stock reaches these levels. - $76 Major Support Level
For those who are considering a longer-term view of Nvidia’s stock, the $76 level could be a more substantial correction. This level is a critical area to monitor, as it represents the low formed in mid-April of the previous year. A drop to $76 would mark a further 36% decline from Monday’s closing price, and it could attract long-term investors looking to accumulate shares at a discount.
Key Resistance Area: $130 and 200-Day MA
As Nvidia’s stock attempts to recover from the steep decline, one of the primary resistance levels to watch is around $130. Investors should focus on how the stock behaves in this area during potential upswings. If Nvidia can break back above the 200-day moving average, this could signal a potential trend reversal and a retest of the key trendline that connects the August peak with troughs that formed in December and January.
The 200-day moving average (MA) is a widely watched metric, and its significance cannot be overstated. A close above this MA would suggest that Nvidia could start to regain positive momentum and possibly initiate another rally, potentially retesting previous resistance levels.
Volume and Market Sentiment
Monday’s selloff also brought record trading volume, which indicates that larger institutional investors are likely rebalancing their portfolios. The high volume suggests that this could be a more significant correction rather than a temporary pullback, and it underscores the importance of keeping a close watch on the price action and volume in the coming days.
While the short-term outlook for Nvidia appears uncertain, the company’s dominance in the AI chip market and its partnerships with major tech firms continue to make it a critical player in the sector. However, the rise of cheaper AI models, such as DeepSeek’s, introduces new risks that could affect Nvidia’s future earnings potential and market share.
Final Thoughts on Nvidia’s Price Action
As Nvidia faces the uncertainty of rising competition in the AI space, the stock is likely to experience significant volatility in the coming days. Investors should carefully monitor the critical support and resistance levels discussed above, as well as any updates regarding Nvidia’s partnerships and product developments.
The DeepSeek AI model poses a real threat to Nvidia’s pricing power, but Nvidia’s established leadership in the AI hardware market and its strong track record in technological innovation mean that the company may still have the resilience to overcome these challenges. However, if the downtrend continues, Nvidia investors may have to brace for further declines before a potential recovery.
In summary, while Nvidia’s future is uncertain in the face of increasing competition, its technical chart suggests that significant price levels—especially the $102, $96, and $76 supports—could define the direction of the stock in the coming weeks.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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