If you've been paying attention this year, you've likely heard about failed tops. They've been everywhere, teasing traders with bearish setups that never materialize.
Here's how it usually plays out. When support breaks, short-sellers rush to pile on, driving prices lower. But then, the market pulls a fast one. Prices creep back above those broken supports, squeezing shorts and forcing them to cover. Meanwhile, the longs panic, rushing to re-enter.
The latest chatter has been about a potential head-and-shoulders top in Nvidia $NVDA. But let's be real—the bulls are taking back control, and this setup is looking more and more like another false alarm.
Here are three key levels I’m watching in the coming days:
The VWAP from the August 5th lows at $126.50: This level is the bulls' final line of defense. Prices rebounded from it last week, but a clear break below could trigger a much sharper decline.
The neckline of the pattern at $132: Price is currently holding above this level, keeping the bias to the upside and the bulls in the driver's seat.
VWAP from all-time highs at $138: With Nvidia closing above this level today, it signals confirmation that this "top" is yet another failed attempt.
The bulls are driving for now, but these levels will determine whether the "failed top" narrative holds.
If you think the bull market is over or nearing its end, you might anticipate this top to play out.
However, if you believe we’re still in the middle stages of this bull market and view this as just another buying opportunity, the poster child of this cycle is likely to find support and finish the year on a strong note.
We put on a trade in our Breakout Multiplier strategy last week. Now, with NVDA reclaiming the VWAP from its all-time high, we’re nearing the point where the position could double.
