NVDA - Have we found a Bottom

Aug 12

NVIDIA Corporation has been the darling of us stock traders for the last 12 months and we wanted to publish an idea to look at the technical analysis arguments of whether this is a good time to buy this stock at a discount.

The first thing we are looking at, is the volume using Diddly Liquidity Zones and you can see here how on this one hour chart the indicator picked the end of the bull run on the 20th June 2024.

https://www.tradingview.com/x/VC2vQFnb/

Today is the first time since the start of the sell off that we have seen significant bullish activity.

Although at this stage it is important to point out a couple of facts:

1. Newly created bull zone has not yet been confirmed. To be a confirmed bull zone, we will want to see price trading above this level for a period of time.

2. During the creation of the bull zone the indicator has printed a potential short term reversal signal (red triangle), which makes it even more important not to consider an entry until we see confirmation as mentioned in point 1 above.

https://www.tradingview.com/x/ujTCApoO/


We also have a couple of trend lines from traditional technical analysis that are currently in play and we would want to see those broken and signifies the extent that we would want to see price trading above today's new created Bull Zone. Before considering getting back on the buy side during a retest of this zone.

This has been annotated below.

https://www.tradingview.com/x/nGoX5laH/

We also consider the "Diddly Real Volume Trend" indicator, which at the moment supports the idea that we could have found a bottom. On this 15 minute chart we are now making higher highs and higher lows.

https://www.tradingview.com/x/CSeSYEbk/

It is also important to consider other principles. Here on this daily chart, using the FIB discount pricing principles, we have certainly found buyers at these levels

https://www.tradingview.com/x/CPLoQ9zN/

In a Perfect World

With the AI stocks being so hot, the following maybe wishful thinking and is why it is important to trade what you see and not what you want.

Our ideal buy price for this stock would be the between 90 and 75 dollars, where we have some strong levels to work with and a great risk reward potential.

https://www.tradingview.com/x/OcpyYfeb/

What Next?

So for now we are waiting to see how price action plays out in the coming days. We will update this idea as price action evolves.

Aug 13

Note

So the first part of the idea has started to play out.

The 1 hour bull zone created yesterday predictably saw price trade higher today, which is a good sign for the short-term bulls. For this idea, we are looking for a longer term investment, so are really looking for further confirmation of price to take out the previous swing high before looking for a re-test entry.



If you were looking to trade this intraday today, the 5 sec chart provided the perfect trade setup with a 8:1 risk reward and highlights the principle of the liquidity zone retest entry.

Aug 14

Note

Interesting development on Wednesday 9 am EST 1 hour candle, where we have printed a new bear zone.

This is an unconfirmed zone at this time and will have to wait and see if price trade below its lows for a period of time.

When comparing this bear zone with the previous bull zone created on Monday, I have outlined some volume stats to compare the two sides:

Monday Bull Zone:

Relative Volume = 229%
Volume = 19.87 Million share traded

Wednesday Bear Zone:

Relative Volume = 241%
Volume = 19.73 Million share traded

So very little difference between the two zones and would certainly bring into question the reliability of the bull zone for taking any retest entry trades. Obviously we will have to wait and see when price comes back to this bull zone.



The other problem I see for the buy side at the moment, is that we have not taken out the previous swing highs. So if we reverse of this point, it would suggest that we are still in a down trend on this 1 hour timeframe.



The other point worth noting is that we have reversed of an inside bar's candle body, which can be a powerful sign of institutional intentions, which in this case would suggest bearish. (Have outline the candle in a white box and projected the body to make the point below)



So for the moment, as mentioned in the first part of this comment, this new bear zone has not yet confirmed. So it could still end up being a bullish signal if the bear zone is not confirmed to the downside. So for the moment we will have to wait and see how this plays out.

Aug 15

Note

So an update on todays price action. The liquidity zones indicator has now classified yesterdays bear zone as a trap zone. (Red zone has now turned orange)

This is a very bullish indication and we will be looking over the coming days at lower timeframes to frame trades and manage risk if we get a retest of the trap zone or the original bull zone created at the beginning of the week.