August 23 Chart of the Day - NVIDIA
NVIDIA (NVDA) has the internet ablaze with headlines about its AI technology and its stock price.
Today we'll take a look at its price and how to use Fibonacci and the math / probabilities behind it to create potential upside price targets. Note, these are not levels to short or buy, but anticipated upside targets as if you were already long for trade management educational purposes.
This approach can be used for any chart that is trading at or near all time highs (ATH) with little to no previous historical price structure at these levels.
For this analysis we're only going to look at the monthly chart as it provides the best perspective for this type of price action technical analysis for this specific chart.
There are two bull fibs on this chart that are color coded for ease of viewing. The green fib anchors are a traditional low to high that had a deep 78.6% retracement back in October 2022 around $110. Because this level held pretty strictly it then puts the green -23.6 and -61.8 Fib extension levels mathematically in play.
We can see that the -23.6% extension target near $420 was already reached so next up could be the -61.8% at $532.67. We know that price rarely, if ever, travels in a straight shot. (Typically, as we all know, price cycles up and down.)
And now because we see that in route to the green -23.6% target price broke above the previous ATH of $345.66 we can now use advanced high to high Fibonacci anchors (in orange) to create new potential reversals levels and target levels between the very large price distance between the green -23.6% and green -61.8% Fib extensions.
As of this posting, price retraced and respected the orange advanced high to high Fib levels between the orange 50% and orange 61.8% "reversal zone" which now puts the orange -23.6% Fib extension in play as a potential target at $512.60.
So now on the chart we have what I like to call two "active Fibs" that are bullish in nature. (Yes, at lower time frames there could be more Fibs in play I know so don't email me telling me that haha.)
Additionally, using the Fibonacci ABCD pattern we can determine a midway potential price target between the green -23.6% and -61.8% Fib extensions as seen by the green 161.8% Fib level at $493.76.
And just for fun, because NVIDIA reports earnings after market close today we looked at the current option price for the ATM (at the money) Straddle that expires at the end of this week and calculated it to be roughly $47.40.
This implies that the market is anticipating either a $47.40 potential move up or a potential $47.40 move down in NVIDIA's stock price between now and close of market on Friday.
With the current trading price of $466.20 this puts $513.60 in play to the upside (in line with the orange high to high -23.6% Fib extension) and $418.80 in play to the downside (previous support/resistance and the already surpassed green -23.6% Fib extension as well as a retest of the orange advanced high to high Fib retracement zone.
So you see, to me it all boils down to the "math" behind the price action. Even when price is trading at ATHs Fibonacci, previous Support/Resistance, and Trend can all be used to create projected price structure on any chart.
If you'd like to learn more about this type of Fibonacci price action technical analysis you can download our Free Guide: 6 Fibonacci Types that Create the Most Precise Price Targets and Reversal Zones at this link.
Additionally, you could enroll in our *NEW* Fibonacci Course titled: Master the Magic of Fibonacci: A Comprehensive Course on 6 Powerful Fib Types for Precise Price Targets & Reversal Zones on sale this week for only $47 (a $693 value!)
So what's next?
We don't make predictions...
Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.
- Support/Resistance
- Trend
- Fibonacci
- Supply/Demand Zones,
- Change Control Zones
Take a look at the charts and let us know what you think.
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