Nvidia’s (NASDAQ: NVDA) stock is trading under bearish pressure after slipping below $140, and a technical strategist has suggested that the equity could rally if it clears key resistance levels.
The semiconductor giant closed at $135.16 on December 10, down over 2.6% for the session and nearly 7% over the past week. In pre-market trading on December 11, Nvidia rose about 1%.
NVDA’s key level to watch
Despite a strong performance in 2024, the stock’s momentum now hinges on critical technical levels, according to Blue Chip Chief Technical Strategist Larry Tentarelli.
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In an X post on November 11, Tentarelli noted that he has been long on Nvidia since May 2023 but has recently trimmed some gains. He emphasized that no single stock leads indefinitely, hinting at a potential rotation to new AI-related leaders such as Palantir and Tesla.
While Tentarelli expressed caution about Nvidia’s near-term performance, he identified a weekly close above $150 as a critical level signaling renewed bullish momentum. He further noted that breaking above $152 could confirm strength, with an upside target of $175.
“I’m long since May 2023 and holding, some gains booked recently, but no one stock leads forever. New leaders. If NVDA has a weekly close over $150, game on,” he said.
The expert had earlier highlighted broader optimism in the AI sector, which is driven by growth in data centers, cloud computing, and networking. However, Nvidia’s $3.6 trillion market cap may limit its outperformance relative to emerging players.
On the other hand, technical analysis by charting platform TrendSpider noted that Nvidia is at a pivotal moment, with indicators pointing to either a breakout or a breakdown. Currently, the stock is hovering above its 50-day simple moving average (SMA), a critical support level.
Repeated tests of this SMA, seen in early September and now in December, have raised concerns about potential bearish momentum. Adding to the uncertainty is the “squeeze” indicator, which signals an imminent increase in volatility.
Nvidia China headwinds
This technical setup comes amid an antitrust probe from China. Recent declines in Nvidia’s stock were triggered by Chinese regulators launching an antitrust investigation into the company’s $6.9 billion acquisition of Mellanox Technologies in 2020.
Chinese authorities allege the deal violated anti-monopoly laws, raising concerns about Nvidia’s access to one of its largest markets.
This comes from the U.S.-China tensions escalating, particularly in the AI chip race. The U.S. has tightened export restrictions, barring Nvidia and other chip makers from selling advanced AI chips to Chinese buyers.
Although these geopolitical risks pose challenges, Nvidia is likely to continue leveraging its dominance in the AI space to rebound. Future products like its next-generation Blackwell chips are expected to sustain interest in the company.
Nevertheless, given the significance of the Chinese market, Nvidia requires a seamless resolution to the antitrust probe to avoid further disruptions.
Featured image via Shutterstock
