The NVDA Trade: The Tactical Case for an NVDA Retracement

NVIDIA's price has been confined within a well-defined ascending channel, with its upward trajectory governed by a diagonal support trendline and its upside limited by a confluence of resistance. The stock's recent attempts to advance have been definitively rejected by this overhead resistance zone, signaling a lack of sufficient buying pressure at current price levels.

The Trading Hypothesis
The primary thesis is that the price will re-engage with and test the strength of the lower diagonal support trendline one final time. The failure to decisively break the dual overhead resistance marks a key moment, suggesting that a retracement is necessary to reset market conditions and establish a more stable foundation for a future rally.

This projected move involves a retracement back to the lower boundary of the existing channel. The price action here will be critical. Should this diagonal support fail to hold—a high-probability scenario given the recent rejections at resistance—it would trigger a breakdown of the prevailing uptrend.

This breakdown would likely initiate a more substantial corrective wave, driving the price toward the next major horizontal support level. This lower support line, identified on the chart, represents a key demand zone where new long-term buyers may step in, providing the necessary liquidity to halt the decline and potentially form a new base.

Entry Point: The Red Arrow
The red arrow on the chart signifies the optimal entry point for initiating a short position.

Exit Point: The Green Arrow
The green arrow marks the strategic exit point for the short position. This level is defined by the next major horizontal support line