Nvidia (NVDA) shares plunged nearly 7% on Wednesday after the chipmaker disclosed a potential $5.5 billion hit to earnings due to new U.S. export restrictions on its AI chips to China. The announcement spooked investors, sending the stock into a tailspin, though technical signals suggest there may be more to the story than just panic selling.
Despite the sharp drop, the session ended with a doji candlestick formation—a technical indicator that signals indecision between buyers and sellers. This subtle cue, combined with strategic chart analysis, could help investors identify key turning points in Nvidia’s volatile price action.
The Catalyst: U.S. Export Restrictions
Nvidia revealed in a regulatory filing that it would now need an export license to ship its popular H20 AI chips to China, a move prompted by U.S. concerns that the chips could be used in supercomputing applications with national security implications. The decision surprised analysts and traders alike, especially considering the H20 chips were specifically designed to comply with prior export restrictions introduced under the Biden administration.
The new restrictions add another layer of uncertainty to Nvidia’s outlook, particularly as Washington’s tech policy toward China continues to evolve. Since the beginning of the year, Nvidia’s shares have lost roughly 20% of their value, weighed down by both policy risks and shifting AI investment trends.
Technical Outlook: Support and Resistance Zones
For traders and long-term investors alike, a technical analysis of Nvidia’s chart offers valuable context for navigating the stock’s next moves.
Support Levels to Watch
As of Wednesday’s close, Nvidia shares were down 6.9% to $104.49. Should selling pressure continue, the first major support zone lies near $96, just above April’s tariff-driven lows and aligning with twin peaks from March 2024. This area could attract value-seeking buyers.
If this level fails to hold, a further decline could test $76, near a major swing low from April 2023. This region represents a potential accumulation zone for long-term investors looking for discounted entry points.
Resistance Levels to Monitor
On the upside, a breakout above the top trendline of Nvidia’s falling wedge pattern—especially if backed by strong volume—could spark a rally toward $130. This level sits just above the 200-day moving average and coincides with a convergence of previous highs and lows from August and December, likely forming a zone of overhead resistance.
Should bullish momentum continue past $130, Nvidia could retest the $150 level. This price target aligns with several historical peaks just below the stock’s all-time high from early January. It also matches a measured move target derived from the wedge pattern: by adding the wedge’s $40 depth to a breakout level of $110, a potential upside of $150 is projected.
What to Watch Ahead
The latest developments place Nvidia at the center of multiple crosswinds: shifting geopolitical trade dynamics, fluctuating investor sentiment in the AI sector, and critical chart-based inflection points. Investors will also be closely watching the company’s next earnings report to assess how severely export curbs could dent its financial performance.
For now, the formation of a doji pattern amid heavy selling may indicate that Nvidia is approaching a pivotal moment. If the $96 support level holds firm and sentiment stabilizes, a technical rebound could be on the cards. However, further deterioration in U.S.-China trade relations or disappointing earnings could drive the stock lower, with $76 as the next safety net.
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