$NVDA broke into Wave 3 in a 1–2–3 pattern — highest target 8:04AM ET Aug 6
Note: this is an AI generated article using Chat GPT
### NVDA Breaks into Wave 3 After 1–2–3 Pattern — August 6, 2024, 8:02 AM PT
NVIDIA Corporation (NVDA) has just initiated a promising breakout into Wave 3, following a classic 1–2–3 Elliott Wave pattern. This breakout is a significant indicator of potential upward momentum for the stock, suggesting that NVDA could see substantial gains in the near term.
#### Breakdown of the 1–2–3 Pattern
The recent price action of NVDA showcases a textbook 1–2–3 Elliott Wave formation:
1. **Wave 1 (W1)**: The initial impulse wave that moved from the low of $91 to $103. This 12-point rise set the foundation for the subsequent corrective and impulse waves.
2. **Wave 2 (W2)**: A corrective zigzag ABC pattern that retraced from $103 down to $99. This correction was necessary to shake out weak hands and set the stage for a stronger upward movement.
3. **Wave 3 (W3)**: The breakout wave, which has just surpassed the $103 resistance level. Based on Elliott Wave theory, Wave 3 is typically the most powerful and extended wave in a five-wave sequence.
#### Technical Significance of the Breakout
The breakout above $103 is particularly significant for several reasons:
1. **Resistance Overcome**: Breaking past the $103 resistance level confirms the end of the corrective Wave 2 and the beginning of Wave 3. This breakout is a clear signal that the bulls are in control and that further upside is likely.
2. **Volume Confirmation**: Ideally, this breakout should be accompanied by increased trading volume, indicating strong market participation and confidence in the upward move.
3. **Momentum Shift**: The move above $103 marks a shift in market momentum, with buyers stepping in more aggressively, signaling a potential trend reversal from the recent downtrend.
#### Projected Targets for Wave 3
According to Elliott Wave principles, Wave 3 is often the longest and strongest of the impulsive waves, typically extending 1.618 times the length of Wave 1. Given that Wave 1 spanned 12 points (from $91 to $103), the projected target for Wave 3 is approximately:
- **1.618 x 12 points = 19.416 points**
Adding this to the Wave 2 low of $99 gives a potential target range of:
- **$99 + 19.416 = $118.416**
Therefore, the projected target for Wave 3 is between $117 and $118, suggesting significant upside potential from current levels.
### Market Context and Sentiment
Several factors are contributing to the bullish sentiment surrounding NVDA:
1. **Positive Market Environment**: The broader market environment has shown signs of recovery, with major indices bouncing off recent lows and investor sentiment improving.
2. **Strong Fundamentals**: NVIDIA’s robust financial performance and strong positioning in key growth areas like artificial intelligence, gaming, and data centers provide a solid fundamental backdrop for the stock’s upward trajectory.
3. **Technical Indicators**: Key technical indicators, such as moving averages and relative strength index (RSI), are supporting the bullish case, with NVDA showing strong momentum and bullish crossovers.
### Risks and Considerations
While the breakout into Wave 3 is an encouraging sign, it’s essential to remain aware of potential risks:
1. **Market Volatility**: Broader market volatility can impact NVDA’s price action, with potential for sharp intraday swings.
2. **Resistance Levels**: NVDA may encounter resistance at higher levels, particularly around the $117-$118 target range, where profit-taking could occur.
3. **Economic Uncertainty**: Ongoing economic uncertainties, including inflation concerns and geopolitical events, could influence market sentiment and impact NVDA’s trajectory.
### Conclusion
NVIDIA’s breakout into Wave 3 above the $103 resistance level marks a significant bullish development, setting the stage for potential gains towards the $117-$118 target range. This breakout, supported by strong fundamentals and positive market sentiment, suggests that NVDA could see substantial upside in the near term. Investors and traders should monitor the stock closely, as the confirmation of Wave 3 could present significant opportunities for gains amidst ongoing market dynamics.
