Nvidia Stock Chart: Following new export controls, NVDA could decline by 18% to $328

Nvidia (NVDA) stock has broken through the neckline of its head-and-shoulders technical pattern on the daily chart, meaning that investors should expect a major 18% decline to near $328.

The pattern appears more likely to ensue now that NVDA stock is being pressured following a Wall Street Journal report that the Biden administration’s export controls could curb more than $5 billion worth of Nvidia chips sales to China.

Nvidia stock news: AI chip curbs immediate, says Biden administration

The Wall Street reported on Tuesday that President Joe Biden’s administration told Nvidia officials last week that the previously announced export restrictions on state-of-the-art chips used for AI workloads – including Nvidia’s A100 and H100 GPUs used in generative AI – were immediately in effect.

The Journal spoke with company executives close to the matter who said Nvidia had planned to ship next year’s batch of orders to Chinese customers in mid-November, in order to front run the new rules, but now could lose out on more than $5 billion in 2024 sales.

Nvidia’s stock gave up more than 2% on the news this Tuesday and has finally lost its trillion-dollar market cap. Nvidia reached the $1 trillion mark earlier this year after its revenue guidance exploded higher on a flurry of orders relating to the generative AI industry. Nvidia is widely thought to offer the highest value chips for generative AI workloads.

Traders are still keeping their eyes on Advanced Micro Devices (AMD) earnings that arrive after Tuesday’s market close. Wall Street consensus expects AMD to post earnings of $0.68 per adjusted share on $5.69 billion in sales.

Nvidia stock forecast: Head-and-shoulders chart pattern calls for $328 target

The daily chart below offers up a textbook head-and-shoulders pattern. The “head” came on August 24 at an all-time high of $502.66. The pinnacle of each “shoulder” gave up in mid-July and mid-October in the area between $476 and $481.

The neckline of the chart pattern starts at the August 14 bottom at $403.11 and rises through the September 21 bottom at $409.80. This means that NVDA stock broke through the neckline on Thursday, October 26, just above $415.

Head-and-shoulders patterns are bearish signals, and the price target comes from the difference between the top of the head ($502.66) and the neckline break (~$415.50). This conjures up an $87 downside movement that is expected to curtail near $328.

Nvidia reached resistance in the vicinity of $328 back in November 2021, although that rally did momentarily climb above $346. Another more recent point of historical resistance is the $318.28 high from May 18, earlier this year.

NVDA daily stock chart