Here’s the pattern Scott’s looking for on $NVDA – January 11, 2022

by DAN NVDA 
This is Scott with your Chart of the Day. I want to show you what pattern I’m waiting to play out here on NVIDIA ( NASDAQ: NVDA ).

If I zoom out here on the NVIDIA ( NASDAQ: NVDA ) chart, this chart actually trades pretty orderly, for the most part. It is in a well-defined uptrend, usually, and above all the major moving averages, usually. And when it’s not, that, in my opinion, is just when you want to be patient with a stock and wait for it to start trending again.

You can see that from January of 2021 to today, January 2022, it gives you some pretty nice downward sloping trendline entries. Downward sloping trendline, downward sloping trendline, it’s more of a sideways trendline, still, you kind of get the picture, and then, yes, a little downward sloping trendline. And so that is kind of what I am waiting to play out here on NVIDIA ( NASDAQ: NVDA ) now.

If I draw a trendline from here, here we go again, downward sloping trendline. Hey, let’s get fancy, draw a second line, you could say this is actually in a little bit of a wedge or a channel. And so what I think we should do with NVIDIA ( NASDAQ: NVDA ) is just kind of be patient here. Just kind of wait for a resolution of this wedge channel or downward sloping trendline to happen. Whether that is to the downside or to the upside.

I am going to set an upside alert because I am usually a long bias trader, on this trendline for about a month and just kind of wait to see if this can break out of this channel. Because if I try and trade it here within the consolidation I know I am just going to get chopped to pieces. So I am going to set an alert on that trendline and wait for a strong move back above that 50-day moving average coming on volume.

The great thing about having a pattern that you spot or whatever is, you don’t end up getting chopped in this mess once you can determine what you think the stock is doing. So I am going to keep an eye on NVIDIA ( NASDAQ: NVDA ) here to break out of this channel or consolidation period above and do it on volume.

Now, that means I am not going to catch the bottom, but ideally, I am going to get the stock as it breaks out of consolidation and starts to trend. Because that is typically what happens, once it breaks out of this consolidation you’ve got a nice smooth ride to the upside.

Those are the types of trades I like to execute. I like these smooth rides. I don’t like chopping sideways, wondering what is going to happen. We are kind of still in the chop zone here with NVIDIA ( NASDAQ: NVDA ). I am going to watch for a breakout to the upside on volume.

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