NVIDIA Stock Price and Forecast: NVDA consolidates after break to all time highs

• NVDA breaks out on Monday to all time highs.
• NVIDIA stock staging a small pullback on Tuesday.
• Shares surging despite regulatory pressure over ARM purchase.

Update: It is no surprise to see NVDA shares pause for breath after yesterday's surge to fresh all-time highs. NVDA stock is down just over 1% in early trading on Tuesday but importantly remains well above $208.73, the key breakout level and now important support. At the time of writing the shares are trading at $217.31. 

NVIDIA stock posted a new 52-week and all-time high on Monday as the stock surged nearly 6% to close at $219.58. This is despite some regulatory hurdles being placed in the way of bulls by the UK Competition & Markets Authority (CMA). NVIDIA has proposed to purchase ARM in a potential $40 billion deal. ARM is a UK chipmaker, and the sector is under recent merger focus as a global semiconductor chip shortage hits many industries. President Biden set up a task force to help US companies deal with the issue and to address shortages. The most recent earnings season has seen many companies comment on chip shortages and how these are impacting investment and growth plans. As a result, many chip makers have announced plans to step up production and or announced mergers to try and increase capacity. China recently approved Maxim being bought by Analog Devices, and NVIDIA has looked to keep pace with the industry consolidation by attempting to buy ARM.

However, the UK Competition & Markets Authority announced on Friday that it had concerns over the proposed merger. Reuters reported the CMA saying the deal could lead to "significant competition concerns" and "the CMA found that the merger should be progressed to an in-depth Phase 2 investigation on competition grounds." NVIDIA has reportedly offered remedies, but the CMA did not think they would help. "We're concerned that NVIDIA controlling ARM could create real problems for NVIDIA's rivals by limiting their access to key technologies and ultimately stifling innovation across a number of important and growing markets," said Andrea Coscelli, head of the Competition & Markets Authority.

All in all not positive news so the performance of NVDA stock yesterday in hitting new highs is even more impressive and shows us also the power of technical analysis as the breakout pattern emerged despite this backdrop. 

NVDA statistics

NVIDIA stock forecast

We can see clearly from the chart that the catalyst for the move was NVIDIA stock's strong earnings release last week. NVDA beat on earnings per share (EPS), $1.04 versus $1.02 estimated, and on revenue, $6.51 billion versus $6.33 estimated. NVIDIA also upgraded its Q3 outlook for sales to $6.8 billion versus the $6.53 billion estimate. The initial reaction to the results was negative, but this was quickly turned around as investment banks rushed to upgrade their price targets. Once NVDA stock looked at the previous high we can see the power of volume or lack of it from the volume profile bars on the chart below. We often go on about volume profile and especially how a lack of volume means the chance for a breakout is much higher. NVIDIA stock showed us this perfectly. 

Now the key support is at $208.73, the previous high. A breakout should not lead to a retracement below the breakout level. Those long should use trailing stops to maintain profits. The Relative Strength Index (RSI) is close to overbought levels, but we can see from back in June and July how this can remain the case for some time. The Moving Average Convergence Divergence (MACD) has crossed over and confirmed the breakout so all is bullish above $208.73 in our short-term view.