Elliot Would Suggest NVDA to Double.
We'd be in the middle of a consistent trend leg.
Going to be brief in the analysis for this because there’s an extremely detailed version of the sequence of rules I am using for fibs here.
RUT May Produce Exceptional Opportunities Soon. (substack.com)
Read the above link for context on this analysis.
In this analysis I’ll make some very specific forecasts. This is a sequential trade plan. Meaning we need to see swings hit to support the thesis and as certain markers hit this helps us to understand we may have good odds of future ones hitting. I’ll give invalidation criteria for the setup where a quick escape could be made if wrong.
Big Forecast:
Overall persistent rally to 800 - 850.
A choppy market and some sort of false reversal at 850.
Low around 700. There should be bad news around here, but it’s a big buy the dip.
Crazy strong run through to 1,000.
Some sort of spike out of 1,200 (Can be up to 25%, giving 1,250).
A drop under 1,000.
1,000 holds retest.
Crash one to 700.
Bounce to around 900.
Drop to around 350.
If you read the link, you should see what I am doing here and if not this will just sound like hyper over ambitious guessing.
RUT May Produce Exceptional Opportunities Soon. (substack.com)
General roadmap is simple enough. Now let’s get into the practical stuff.
The situation here is NVDA might run up nice and smooth another 70% before it starts to get more choppy and on the other side of that this could be a parabolic blitz where a high is in or coming and a savage rug pull is due. Which sounds risky, right? But we can mitigate a lot of this using basic trend structure.
Knowing where to place stops for NVDA if it is in the bull setup is really simple. On a stop loss basis, there’s exceptionally little risk to NVDA and it’s a super simple no brainer buy the dip/buy the break and drag stops tight to get out as soon as there’s any real fight from sellers.
But stocks gap. And that means the true risk can never really be known. This is a risk. It’s a risk with all stock trades and there’s an increased risk for volatile stocks. Other than perpetually buying puts there’s no way to fully protect from this, and this has to be respected when it comes to sizing decisions.
Closer Analysis
First thing we always want to do is see if our fibs show significance to price. And with the high - low of the drop swing, it does.
The gap stops at 1.27 and then 1.61 pulls back. This gives us good reason to believe 1.61 can be an important inflection point. Also does warn us this is the most risky area for sellers. 1.61 is where the decision is likely to be made. This looks bullish now but bear tops do also.
We need to look at the local trend for failure points and in this instance it’s really easy because we have a simple 76 retracement.
Really easy for bulls to use under here as the stop loss zone and this type of stuff happening should be a stark warning to shorts that there’s still significant buyers in this. It’s not a distributed network of small retail buyers creating these 76 dip and rips - I’d assume.
If we’re in an uptrend we should see more of the same. Periodic sharp drops. Various people calling for a top but retracements ending around 76s of recent upswings and the rallies being more impressive than the drops.
Long stops can be trailed behind the lows and positions can be built up.
If this is happening, it will be really obvious. Elliot wave threes are exceptionally easy to trade if you accept that you’re in a trend which is going to be stronger than you probably expect and you should not try anything clever - you should just take all buy signals and manage your risk well to be out as soon as the trend fails.
And if it is not happening, it will be really obvious. We’d expect to be kicked out quickly after some sort of 1.61 headfake.
An Elliot wave 3 is super easy to trade but few trade it well because it’s feels overextended and people tend to want to call a top.
As a habitual top/bottom caller, let me tell you - wave 3’s are a time to give that a miss and just play ole, “Trend is your friend until it bends” style game.
High high/higher low structure is a requirement of this analysis. If this analysis is correct, it should be in any way subtle that NVDA is trending higher.
Trading Signal
Long 456
Stop 407
Target 800
7:1 Risk reward