Fading the Top in NVDA

There’s chatter about a potential head and shoulders top forming in NVDA. 

While it’s always good to be aware of potential reversal patterns, let’s keep things in perspective: these so-called “tops” have failed all year long.

We want to fade yesterday’s selloff and make the bet that this top in NVDA turns into a continuation pattern just like all those before it.

The underlying trend is far more important than any short-term pattern. And that trend, for Nvidia, continues to point higher.

Price is bouncing off the VWAP from August 5th lows.

This has all the characteristics I look for in a failed top, and this week, we even got a little shakeout to new lows. 

I love it when these patterns trap the bears before price springs higher. This is a common way for the failure rally to kick off.

We’re buying the $NVDA 1/24 $150 calls at approximately $2.50–$2.65 per contract.

Steve