Why Nvidia Looks Set to Soar To $325 After Breaking From This Key Pattern

NVIDIA Corporation NVDA has settled into a bullish flag pattern on the daily chart. The bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines.

• For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downwards within the following channel for a short period of time. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
• Bullish traders will want to watch for a break up from the upper descending trendline of the flag formation, on high volume, for an entry. When a stock breaks up from a bull flag pattern, the measured move higher is equal to the length of the pole and should be added to the lowest price within the flag.

A bull flag is negated when a stock closes a trading day below the lower trendline of the flag pattern or if the flag falls more than 50% down the length of the pole.

See Also: Jim Cramer Sees Any Weakness In Nvidia Stock As Chance To Buy It

The Nvidia Chart: Nvidia’s reversed course into a bull flag pattern on March 15, with the pole created between that date and March 21 and the flag formed between March 22 and Wednesday. On Thursday, Nvidia was attempting to break up from the bull flag pattern, spiking up over 5% by mid-morning.

• The measured move on a break of the bull flag pattern is about 25%, which indicates Nvidia could trade up toward the $325 level in the future.
• The stock is also trading in a confirmed uptrend pattern, with the most recent higher low created on Wednesday at the $255.75 level and the most recent higher high formed on Tuesday at $272.38. If the stock breaks up from the bull flag pattern on higher-than-average volume on Thursday or Friday, Nvidia will also print another higher high to further confirm the trend.
• The stock is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. Nvidia is also trading above the 50-day and 200-day simple moving averages, which indicates long-term sentiment is bullish.
• Nvidia has resistance above at $272.29 and $288 and support below at $252.59 and $230.43.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.