Nvidia Drops 3.5% To $175.64 As Technicals Signal Deeper Correction Risk

Nvidia (NVDA) declined 3.50% in the latest session, closing at $175.64 after trading between $175.49 and $182.50 on elevated volume exceeding 183 million shares. This marks a decisive break below recent support levels, prompting a comprehensive technical assessment across seven frameworks.
Candlestick Theory
The August 19 bearish engulfing pattern—where the real body completely swallowed the prior session's gains—signals potent selling pressure near the $182 resistance. This coincides with a cluster of upper shadows around $183-184 from August 12-14, reinforcing that zone as formidable resistance. Immediate support now rests at the session low of $175.49, with failure potentially exposing June's swing low of $175.90. A close below this level would complete a double-top pattern targeting $163.
Moving Average Theory
Nvidia currently trades below all key moving averages: the 50-day ($177.50), 100-day ($170.30), and 200-day ($150.80). The recent death cross (50-day crossing below 100-day) confirms deteriorating medium-term momentum. However, the 200-day slope remains upward by 22% annually, preserving the structural bull trend. A sustained break above the 50-day MA is needed to neutralize immediate bearish pressure.
MACD & KDJ Indicators
The MACD histogram shows accelerating negative momentum, with the signal line diverging sharply below the zero line since August 5—the longest bearish streak in three months. Concurrently, the KDJ oscillator registers a bearish convergence: %K (28) and %D (34) plunged below the 30 oversold threshold, while the J-line (16) approaches extreme territory. This dual-oscillator alignment suggests capitulation selling but may precede a technical bounce.
Bollinger Bands
August's volatility contraction saw bandwidth tighten 18% from July's peak, typically preceding directional breaks. The price has now pierced the lower band ($176.80) for the first time since June, with bandwidth expanding 8% intraday—signaling renewed volatility. Historically, such events marked local bottoms when RSI oversold (March, June), though continuation declines followed when volume surged (November).
Volume-Price Relationship
Distribution intensified with the breakdown: August 19 volume surged 38% above the 30-day average, confirming institutional selling. The volume profile highlights critical support at $176 (July's high-volume node). Notably, all major down days since July exceeded average volume by 20-30%, whereas rallies lacked volume conviction—a structural weakness undermining recovery attempts.
Relative Strength Index (RSI)
The 14-day RSI (41) has retraced from overbought territory (>70 on July 31) but remains above the oversold threshold. Bearish momentum dominates per the RSI's lower highs since August, diverging from price's sideways action. Historically, meaningful reversals required RSI penetration below 30 with subsequent bullish divergence. Current readings suggest further downside before stabilization.
Fibonacci Retracement
Applying Fib levels to the June 24 low ($116.00) and August 13 high ($183.97): the 23.6% retracement ($163.47) aligns with the 100-day MA and July's consolidation floor. The 38.2% level ($158.44) converges with the 100-day MA and June's swing high—making it a high-probability reversal zone if tested. August 19's close nears the 23.6% level, which must hold to prevent deeper correction.
Confluence & Divergence Observations
Confluence emerged at $176-178, where the 50-day MA, Bollinger lower band, and volume-based support failed simultaneously under high-volume selling. A notable divergence exists between deteriorating momentum oscillators (MACD histogram at -3.5, lowest since February) and relatively elevated RSI—suggesting underlying weakness yet limited panic. The $158-164 zone gathers maximal confluence (Fibonacci, moving averages, VWAP) as critical long-term trend support. Should this level fracture during a continuation decline, the primary bull trend may be compromised.