NVIDIA Corporation (NVDA) shares fell more than 4% during Monday's session despite bullish analyst commentary ahead of its much-anticipated earnings report on Thursday.

Morgan Stanley analyst Joseph Moore raised his price target from $148.00 to $170.00 and reiterated his Equal Weight rating on NVIDIA stock, saying that the chipmaker should "clear a low bar" with its gaming chips when it reports earnings this week. Moore added that the company has one of the "better secular growth outlooks" in his coverage universe and noted that Wall Street seems willing to give the company the benefit of the doubt.

Bank of America Merrill Lynch analyst Toshiya Hari also remains bullish on NVIDIA's long-term prospects in gaming but is more cautious in the short term. He believes that data center and automotive weakness, along with a weaker product mix in gaming, could hurt earnings. The analyst lowered his near-term earnings estimates for Q1, Q2 and 2020, but the firm maintains a Buy rating and $185.00 price target on NVIDIA shares.

Technical chart showing the share price performance of NVIDIA Corporation (NVDA)
StockCharts.com

From a technical standpoint, the stock broke down from S2 support at $162.42 as its bearish head and shoulders chart pattern continues to play out. The relative strength index (RSI) moved into oversold territory with a reading of 28.16, but the moving average convergence divergence (MACD) remains in a bearish downtrend dating back to mid-April. These indicators suggest that the stock could see more downside ahead.

Traders should watch for some consolidation around S2 support levels before the stock completes its head and shoulders pattern with a move toward $145.00. If the stock rebounds from these levels, traders could see a move to retest trendline and S1 resistance at $171.71. The direction of the stock will likely hinge on its earnings announcement later this week, which could set the tone for the coming months.

The author holds no position in the stock(s) mentioned except through passively managed index funds.