Nvidia Corp. (NVDA) has posted an impressive 30%+ rally over the past five trading sessions following its first quarter financial results on May 10. With 14 consecutive quarters of earnings surprises under its belt, the company continues to impress Wall Street with its ability to grow revenue thanks to growing demand for artificial intelligence, data center, and autonomous vehicle applications that are rapidly commercializing.

The company’s bread-and-butter may have been gaming applications, but data center revenues have soared from $143 million to over $400 million in just a year. With companies like Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) building out cloud infrastructure, the company should see significant long-term demand for its high performance processors. Auto companies are also relying on the processors to power their self-driving vehicle revolution.

The company may stand on solid fundamental footing, but its stock chart suggests an upcoming period of consolidation. Since breaking out from its upper trend line resistance to fresh all-time highs, the price has lost some of its momentum and volumes are falling. The relative strength index (RSI) appears overbought at 83.77, while a parabolic moving average convergence-divergence (MACD) may be difficult to sustain over the coming days.

Traders may want to consider locking in some profits from long positions in anticipation of a period of consolidation before any substantial move higher. At the same time, traders should keep an eye on trend line support at $120.00 as a key level for a potential buying opportunity. Short-selling the stock may be risky given the company’s strong upward momentum with just 5.1% of shares short – although that figure has increased 7%, according to ShortSqueeze.

Charts courtesy of StockCharts.com. Author holds no position in the stock(s) mentioned except through passively-managed index funds.

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