Nvidia Stock Drops 2.62% As Technical Indicators Signal Short-Term Downtrend

Candlestick Theory
Nvidia's recent three-day bearish sequence—culminating in a 2.62% decline to $170.29—forms a short-term downtrend pattern. The latest session printed a bearish candle with a high of $173.20 and low of $168.41, establishing immediate resistance near $173–174 (prior swing lows) and critical support at $168.40. A sustained break below $168.40 would expose the $164–165 zone (July low), while recovery above $174 invalidates the near-term bearish structure.
Moving Average Theory
The 50-day, 100-day, and 200-day moving averages reveal a bullish long-term alignment (50 > 100 > 200), affirming Nvidia's primary uptrend. However, the current price ($170.29) recently breached the 50-day MA, signaling short-term weakness. The 200-day MA near $135 anchors key long-term support. Consecutive closes below the 50-day MA—absent swift recovery—may foreshadow further consolidation toward the 100-day MA ($150).
MACD & KDJ Indicators
MACD (12,26,9) shows a bearish crossover, with the histogram deepening into negative territory, confirming accelerating downward momentum. KDJ (9,3,3) registers a bearish configuration: the K-line (38) and D-line (45) are trending downward from overbought (>80) levels, though not yet oversold. This signals additional near-term downside potential before stabilization.
Bollinger Bands
Price trading near the lower Bollinger Band ($169) reflects elevated short-term bearish pressure. Bandwidth contraction in early September preceded the recent volatility expansion, typical of directional moves. A close below the lower band ($168.50) could trigger an oversold bounce, whereas consolidation within the lower band may extend the correction.
Volume-Price Relationship
Recent down days were accompanied by elevated volume (e.g., 211.8M shares on Sept 17 vs. 20-day avg ~180M), validating bearish conviction. The high-volume sell-off on September 5 ($373B turnover) established a distribution signal. Any recovery attempt requires rising volume to confirm sustainability; otherwise, low-volume bounces may lack conviction.
Relative Strength Index (RSI)
The 14-day RSI (39) is declining toward oversold territory (<30) but remains above warning levels. This suggests bearish momentum is still building rather than exhausted. RSI divergence was absent at the August high (RSI 68 vs. price peak), indicating no prior reversal warning. A dip below 30 would signal oversold conditions, though trend context (downtrend) demands caution before reversal calls.
Fibonacci Retracement
Applying Fibonacci to the April–August rally (low: $96.91, high: $184.47), key retracements are $159.39 (23.6%), $140.69 (38.2%), and $128.02 (61.8%). Current price action tests the 23.6% level ($170), which coincides with the September 17 low ($168.41). A decisive break below $168 opens the 38.2% retracement ($140) as the next downside target.
Confluence and Divergences
Confluence exists around $168–$170, where Bollinger support, Fibonacci 23.6%, and the September swing low converge. A breach here would align with bearish momentum signals (MACD, volume), targeting $161–$159. Divergence emerges in KDJ (approaching oversold) versus RSI (not yet oversold), suggesting internal indecision. The absence of bullish reversal candlestick patterns and weak volume dynamics favor downside continuation near-term, though oversold bounce risks rise below $168. Long-term structure remains bullish provided $140 (38.2% Fib and 200-day MA) holds.