Yesterday, Nvidia released its Q1 results, outperforming both consensus revenue expectations and Earnings Per Share (EPS) metrics. This could set us up for a continuation of the amazing year Nvidia has already been having, warranting a bull bias. However, historically, Nvidia underperforms on the day after its earnings, so to clean up these doubts, we’ll have to look at the chart and see what that can tell us.
Nvidia on the Daily Timeframe
The first thing we have to notice here is the market structure. The trend has been relentlessly up, with very clear Higher Highs and Higher Lows, ever since the March bottom. This, almost by definition, warrants a continuation view; we know from quantitative research that the momentum factor is real and that stocks that outperformed in the past tend to keep outperforming in the future.
We can reconcile that view with a very clear S/R area spanning from $211-217. Someone looking for trend continuation would thus likely be well off by trying to bid in that area and possibly target new highs. However, it’s not unlikely that the price would leave you behind without providing a test of this area. When levels are this clear, stocks sometimes tend to frontrun them and react earlier as everyone is looking to get in at the same spot.