Last week, the global markets were rocked by the rise of DeepSeek, a Chinese AI company that launched its revolutionary open-source R1 model. While DeepSeek has been around since 2023, the release of its latest AI iteration has changed the landscape dramatically.
Not only does the DeepSeek R1 outperform OpenAI’s flagship models, such as GPT-4 (referred to as the $200 “01” reasoning model), but it also beats other major players like Claude and Gemini on key benchmarks.
The DeepSeek app became the most downloaded app in the United States within a single day, highlighting its viral success and leaving major tech firms scrambling to respond.
The shockwaves were felt most acutely by Nvidia, whose stock experienced its worst single-day drop in history, falling nearly 17% and wiping out $589 billion in market value. Overall, almost $1 trillion was erased from the global stock market as tech investors grappled with this disruptive breakthrough.
NVDA Stock Encroaching on a Weekly Trendline
So, how is the Nvidia stock looking like?
As we pointed out, the stock fell by nearly 17% in a single day. This creates a large gap that spans between $141.88 and $128.40 (range of 9.50%), and is a now acting as a resistance zone.
Within this resistance zone, there are several key prices to watch in the event of a dead cat bounce:
- $132.74, the 50% Fibonacci Retracement
- $136.57, the 61.80% Fib Retracement
- $142.02, the 78.60% Fib Retracement
However, perhaps most importantly, is that Nvidia is approaching a significant weekly trendline originating from February 2024. A break below this line with high volume would be a significant bearish signal, but as of now, the line acts as a dynamic support level.
As of today, the Nvidia is projected to open higher at $123 or sub $120 levels, which shows some promise of a recovery. This recovery could be shortlived if the stock is unable to overcome its market gap.
Key Factors to Watch for a Bullish NVDA:
- Weekly trendline is not broken to the downside with high volume.
- NVDA is able to close a daily candle above the market gap’s highest point, at $141.88.
You may also be interested in:
