Nvidia is going down due to tension between the US and China

Nvidia Corporation (NASDAQ:NVDA extension) fell slightly in the pre-market on Wednesday on the back of the news from the chairman Joe Biden He announces that his administration will restrict Chinese companies’ access to US cloud computing services.

The chip maker, whose stock is up about 185% since the start of 2023, recently pulled back from an all-time high of $440. It comes on the heels of escalating tensions between the US and China, which are aimed at curbing China’s progress in the field of artificial intelligence.

Nvidia printed a shooting star on the daily chart on Monday, indicating a possible price drop on Wednesday. A candle, when found after a rally, often indicates a local rally, although the next candle needs to be printed for confirmation.

In the case of Nvidia, the candle formed on below average volume, which indicates that the candle is weaker than usual.

nvidia outline

Nivida is moving in an uptrend, with a series of higher highs and higher lows. The latest high was formed on June 20 at $439.90 and the low of $401 was recorded on June 26.

• If the stock’s initial recovery candle is confirmed, Monday’s high will act as a lower high, negating the uptrend. If so, bulls will want to see Nvidia reverse course before forming a lower low, while bears will want to see the stock drop below $400.
• Nvidia has a gap between $306.07 and $366.35, which formed on May 25 after the company reported better-than-expected quarterly earnings. Gaps on the charts have a 90% chance of being filled in the future, although the Nvidia gap could be a breakout gap, making it less likely in the near term.
• The stock is trading slightly above the eight-day exponential moving average (EMA), with the eight-day EMA trending above the 21-day EMA, which could give confidence to the bulls. For short-term traders, a decline in the 8-day moving average may be a good exit point.
• Nvidia has resistance above the all-time high of $439.90 and the psychologically important $450 level, while support lies below at $419.38 and $383.40.