It’s hard to imagine a financial media landscape not dominated by incessant Nvidia (NASDAQ: NVDA) headlines nowadays — but the Jensen Huang-led semiconductor venture was a relatively low-profile company not so long ago.
Throughout the course of 2024, Nvidia stock saw prices go up by 187.58% and was trading at $136.80 at press time.
However, it had long been a solid performer — notching only two years of negative returns in the last ten years. One of those years was 2022 — a year that saw interest rates go from 0.25% to 4.5%, leading to a wider tech selloff.
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The other year was 2018 — during which NVDA stock shed a tad over 30% of its value. To be more precise, the losses came late in the year — in October of 2018, the price of an NVDA share dropped by roughly 60%. Now, at the very beginning of 2025, a look at an Nvidia stock chart pattern reveals a worrying amount of similarities, indicating a potential repeat correction.
Technical indicators point to an upcoming Nvidia stock price crash
In October of 2018, the price of an Nvidia share dipped below its 50-day moving average. Shortly after, the price moved below the 200-day moving average.
On top of that, the average directional index (ADX) was printing a level below 20 — indicating that the prevailing bullish trend was weak. To make matters worse, a look at the Chaikin Money Flow (CMF) indicator would have revealed values below zero — in simple terms, selling pressure had overtaken buying pressure.
A look at a more recent chart reveals a glaring number of similarities. While the Chaikin Money Flow indicator is not showing levels below 0, it has struggled to move meaningfully away from that mark for two months — in simple terms, the bulls are holding on, but barely. If we were to focus just on this indicator, we could easily deem the situation even worse this time around.
When it comes to the average directional index, the situation is much the same — with the exception that the ADX has been holding close to 20 since September.
There is a small silver lining at play, however — while the price of Nvidia stock has dipped below the 50-day moving average, we haven’t yet seen a continual drop that would bring it to levels below the 200-day moving average. For reference, that drop would equate to prices below the $120 mark.
So, what would the entire thing — a 60% crash from current prices look like today? Well, the price of NVDA stock would drop to just $54.72.
Additional considerations and dissenting arguments
However, as valuable as technical analysis can be, price action does not happen in some imaginary vacuum devoid of context. In late October of 2018, a wider market selloff occurred, and the S&P 500 shed 6.5% by late December — investors were also apprehensive regarding the industry since Texas Instruments (NASDAQ: TXN) and Advanced Micro Devices (NASDAQ: AMD) had been issuing lower than expected guidance.
There was another important factor at play — following a boom in 2017, the cryptocurrency market crashed in 2018. Cryptocurrency mining was a much bigger deal back then — and the crash led to an oversupply of primarily midrange GPU units — a fact that reflected negatively on Nvidia stock prices.
In addition, readers should note that after the 2018 dip, it took NVDA shares roughly 17 months to return to levels seen before the crash. However, the Nvidia of today is not the Nvidia of 2018 — although a leading GPU producer, at the time, the company wasn’t very well known. The level of institutional support/ownership that the company enjoys is also incomparable, per data retrieved by Finbold from Fintel.
Today, the business stands as one of the biggest stock market success stories of the last few years — and a key component of a paradigm shift that could radically reshape numerous industries. Analysts are almost universally bullish on the stock — that’s not to say that a correction will not happen — sustaining this level of overperformance is a tall order. Sooner or later, growth already becomes priced in — except this time, a much quicker rebound is likely.
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