From Boom to Bust? Nvidia Warns of a Potential 50% Drop

After an incredible rally, Nvidia NVDA has finally hit a wall at its all−time high of $140, failing to secure a strong monthly close above this critical resistance level. This stagnation at the peak is a red flag for the stock’s near-term momentum.

Since the rally began in 2016, the monthly chart has been overwhelmingly bullish, with only a few exceptions: 2018, 2022, and now 2024, where the monthly chart has printed a bearish engulfing candle. Historically, when this pattern has appeared, it has led to steep retraces. Based on the median pullback from the past two occurrences, we could see a 50% decline by mid 2025 from current levels, a potential bloodbath for unprepared investors.

Is this a guaranteed outcome? Of course not. But higher timeframes carry significant weight in macro price action, and this bearish signal is too significant to ignore. Stay alert—volatility ahead!

While a short-term pump toward the 140s is more than likely, it’s important to recognize that this move will feel more like a dead cat bounce than a sustainable recovery. For those considering a short position, this potential bounce could offer the perfect entry point.

However, unless NVDA can achieve a strong break above $150 and successfully flip this level into support, there’s no compelling reason to turn bullish here. The macro warning signs remain intact, and the risk of a deeper retrace increases.