Nvidia Shares Plunge More Than 17%
Nvidia’s stock has experienced a significant drop in price in recent hours due to growing concerns about new competition from China, represented by the startup DeepSeek. This Asian startup is positioning itself to offer services similar to those of current AI industry leaders but at a much lower cost. Additionally, its open-source model, unlike competitors such as OpenAI, has generated high expectations, marking a new competitive challenge from China to the U.S. in this sector. Nvidia has led the steep declines in the tech sector in the short term.
Range Breakout:
Recent selling pressure has caused a breakout from a consistent lateral range that had been in place since late October 2024. The movement has been so aggressive that the price has also broken below the 100-period moving average and is now struggling with the 200-period moving average. If the strong bearish pressure continues in the coming sessions, it could jeopardize the long-standing upward trend visible on the daily chart prior to this event.
RSI:
The RSI indicator line has quickly adopted a bearish slope, moving decisively away from the neutral level of 50. However, recent price action has brought the line closer to the oversold zone at 30, suggesting that the momentum of the current decline is significantly imbalanced. This could pave the way for small upward corrections in the short term.
Key Levels:
By Julian Pineda, CFA - Market Analyst
Range Breakout:
Recent selling pressure has caused a breakout from a consistent lateral range that had been in place since late October 2024. The movement has been so aggressive that the price has also broken below the 100-period moving average and is now struggling with the 200-period moving average. If the strong bearish pressure continues in the coming sessions, it could jeopardize the long-standing upward trend visible on the daily chart prior to this event.
RSI:
The RSI indicator line has quickly adopted a bearish slope, moving decisively away from the neutral level of 50. However, recent price action has brought the line closer to the oversold zone at 30, suggesting that the momentum of the current decline is significantly imbalanced. This could pave the way for small upward corrections in the short term.
Key Levels:
- $114: Current support level corresponding to neutral zones from August and September 2024. Bearish oscillations breaking below this level could strengthen selling pressure and establish a sustained bearish bias in the market. However, this zone could also trigger new upward corrections in the coming sessions.
- $131: The nearest resistance level, coinciding with the 100-period moving average. Oscillations near this level could restore market neutrality and potentially lead to a new lateral channel.
- $144: Distant resistance level. Oscillations reaching this level again would bring the strong long-term bullish trend back into focus.
By Julian Pineda, CFA - Market Analyst
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