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Finance,  Technology

When to buy Nvidia’s stocks (NVDA) for a profit? A technical analysis (March – April 2021)

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Note: The information in this article is NOT financial advice.

 

Outline

 

In what follows, a date will be given, after which Nvidia’s stock (NVDA) price is likely to rise. Nvidia’s stock (NVDA) prices are plotted against time. Each price point is the average of prices over a day, and the window represents a year. Indicators, such as Bollinger Bands, Volume, RSI, and MACD, will be used to infer when the stock price is likely to rise. (TD Ameritrade’s thinkorswim platform is used.)

 Bollinger Bands

bollinger bands - nvidia stocks
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When the Bollinger Bands are placed against the stock prices, a pattern can be observed. This pattern can be used to infer when the stock price is likely to rise and drop. When the stock price touches or crosses the lower band, it eventually hits or crosses the upper band after some time (see image), and vice versa. Sometimes, the price only needs to gets close enough to either the lower or upper band to observe this pattern (see image). When the midline or mid-band of the Bollinger Bands has a positive (upward) trend, the price tends to stay above the midline, and when the midline or mid-band has a negative (downward) trend, the price tends to stay below the midline (see image).

Volume

volume - nvidia stocks
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When the price crosses, touches, or nears either the lower or the upper band, there is an uptick in the volume chart (see image). The uptick may occur slightly after the price crosses, touches, or nears the lower or upper band. By an uptick, we mean a rise in the volume, where the volume for the day before and the volume for the day after the uptick are lower than the volume that causes the uptick.

Relative Strength Index (RSI)

rsi - nvidia stocks
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Roughly, when the price rises, so does the RSI, and it goes down when the price drops (see image). When the value of the RSI nears 30, the price tends to cross, touch, or near the lower band, and when the value of the RSI nears 70, the price tends to cross, touch, or near the upper band. When the price crosses the upper Bollinger band and stays above it for some time and the upper and lower Bollinger bands are wider apart, the RSI stays above the 70 line for some time (see image). The trend of the RSI graph tends to coincide with the trend of the midline of the Bollinger Bands.

Moving Average Convergence Divergence (MACD)

macd - nvidia stocks
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When the price has a positive (upward) trend, the cyan line of the MACD is above the yellow line, the farther apart these lines are (or the more they diverge), the more positive the price trend is. When the price trend turns negative (downward), the cyan and yellow lines meet (or converge) and cross each other, and the yellow line is above the cyan line; the farther apart they are, the more negative the price trend is.

When to buy Nvidia’s stocks (NVDA) for a profit?

buy order - nvidia stocks
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Five days before March 8th, 2021, the stock price first crosses the lower Bollinger band then rose back and again crosses the lower band, giving the impression it would continue to rise more; however, it dropped again and crossed the lower band. On March 8th, the RSI touches the 30 line, and the yellow and cyan lines of the MACD, with the yellow line above the cyan line, diverge more from each other, but the price rose on that same day and crosses back the lower band. After a couple of days after the 8th, the RSI kept on going up and the lines of the MACD were converging. Under these conditions, the price was likely to rise; indeed, the price went from $465.22 on March 8th to $552.47 on April 1st. On April 1st, the price crosses the upper band, and the trend of the mid-band slightly changes from negative to positive. Also, the RSI is still below the 70 line, which suggests a higher momentum might be reached, and the MACD lines are diverging with the cyan line above the yellow line, which suggests the positive trend of the price may still continue. Therefore, although the price crosses the upper band, it may still continue to rise after April 1st.

Last Words

After March 8th, Nvidia’s stock price was likely to rise based on the indicators. In fact, it rose until it crosses the upper Bollinger band on April 1st. Based on the RSI value and the MACD lines, the price may continue rising after April 1st.






 

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