The share price for nVidia Corporation (NVDA) has been en fuego over the last year, climbing astronomically in share price from the high $20’s to the $120 mark in December 2016.

Understand that jumping on an uptrend of this magnitude takes on a certain amount of inherent risk. It becomes important to validate technical analysis methods using as many different techniques as possible.

With that being said, let’s start to review some charts for the company and see if the hot streak for its share price will continue. I will calculate and illustrate upside price targets for its share price if its Elliott wave pattern analysis allows.

Last, I will illustrate support areas to monitor in the event of a pullback in NVDA’s share price. These support areas can be used as areas to possibly make scale-in purchases and try to jump in on its uptrend. Let’s get to the charts!

nVidia Corporation (NVDA) – 20 Year Chart

Start off big and wittle your way down to details. That is my preferred method, especially when I look at a new company’s stock charts. nVidia Corporation (NVDA) was a member request and this is my first look at it, so let’s start off with my usual 20 year monthly candlestick chart.

Wow. What a run.

Analyzing a 20 Year Monthly Chart for nVidia Corporation (NVDA)

The chart is bullish with increasing buying momentum and increasing overall buying volume. However, the chart is moving up at a nose-bleed pace and I want to focus on it. I am going to zoom into a 2 year weekly candlestick chart so more detail can be seen and analyzed.[s2If !current_user_can(access_s2member_level1)]….

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NVDA – 2 Year Weekly Review

This next chart is a 2 year weekly chart for nVidia Corporation (NVDA) to focus more on the current uptrend after starting with the 20 year chart. The 20 year chart tells you what to focus on, then you zoom in and focus on it.

With the Fibonacci Extension Tools placed on NVDA’s chart, the most important thing I can emphasize is that the uptrend appears stretched by their calculations. Is a consolidation period necessary or coming up? A healthy uptrend always has at least some correction or consolidation period as some take gains. As more sellers leave a stock, it is easier for a stock’s share price to rise.

Calculating Bullish Upside Price Targets if a Breakout of NVDA’s Share Price Develops

The important take-away from the above chart for nVidia Corporation (NVDA) – watch the price activity at the $120 level. If NVDA’s share price can break and close above that area, there is a possibility that the bullish scenario of reaching the 261.8% Target Line could be in play. The 261.8% Target Line resides around the $159 area.

Reaching that Target Line will most likely include a favorable earnings report. NVDA’s next earnings report is currently scheduled for later this week, February 9, 2017, after the market closes for regular trading.

The Golden Ratio, or the 161.8% Target Line, is the most common uptrend consolidation area. Breaking above this level and reaching for the 261.8% Target Line is going to involve some significant buying volume upcoming and also some volatility.

What about an earnings disappointment? Any pullback to the $90-$100 area could represent an opportunity for a trade back up to the previous highs. Maximum pain for a disappointing NVDA earnings report appears to be around the $85 price level. Trade accordingly.

NVDA – Moving Average Analysis

This next chart is a 1 year daily candlestick chart to look at NVDA’s price action using moving averages. I would not feel comfortable jumping on NVDA’s uptrend (other than for trading purposes) until there was a pullback to the 50 Day moving average. Maximum pain level from a moving average perspective is probably closer to the $80 level, or the 200 Day moving average line.

On a side note, the Bearish Engulfing candlestick pattern that developed on the left side of a potential Cup pattern for nVidia Corporation (NVDA),

Analyzing a Bearish Engulfing Candlestick Pattern that Developed on Significant Selling Volume

Entering into a new trade in this area takes on additional downside risk. Rather than entering into a new position, it would probably be better to let NVDA’s share price either breakout above the resistance area from the Bearish Engulfing candlestick or reach the general resistance area and pullback. Taking action would take place during the pullback from the breakout or the pullback from resistance.

However, since there was volume confirmation for the candlestick pattern, I would anticipate a failure to break above the resistance area for any length of time and to pullback at a minimum towards the $100 area. For my level of risk, this would probably be my maximum purchase price for shares if I wanted to go long on shares. Everyone’s risk level is different though.

nVidia Corporation (NVDA) – Summary

With the development of a Bearish Engulfing candlestick pattern that developed on the daily chart for nVidia Corporation (NVDA), entering into a trade at this level takes on additional risk. If you are trading NVDA, be quick to take profits at these levels. Let is price action indicate its next move. Especially after the development of the Bearish Engulfing candlestick pattern.

Considering monitoring NVDA’s share price around the resistance area from the bearish candlestick rather than trading it.

If possibly reaching the $158 level interests you, consider using a scale-in strategy with NVDA. Rather than the typical 3 purchases, consider making 4 different purchases when building your position. Don’t rush the position. Let a pullback or two help you get better prices. Waiting for a pullback to the 50 Day moving average or a quick break below it could provide one of those scale-in opportunities.

Good luck trading!