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A technical assessment of gold, Cable, Ninja, and Nvidia performance in May

May 23, 2024

Gold (XAU/USD) experienced a sharp drop on Wednesday, settling just above the important support level of $2,375. This support is vital for bulls, as holding this line could prevent a deeper retracement towards $2,360. Should the weakness continue, the focus might shift to $2,335, which represents the 38.2% Fibonacci retracement of the 2024 rally.

In early 2023, gold defended its support at $1,900, leading to a rally above $2,000. Another instance occurred in mid-2021, where holding the $1,750 level led to a subsequent climb towards $1,900.

Also see: Gold prices see dip on hawkish Fed minutes

A bullish reversal from the current support could propel prices towards $2,420, with potential to reach $2,430. Overcoming this resistance may lead to a rally towards the all-time high around $2,450.

The forecast remains cautiously bullish if the $2,375 support holds, with a potential for a rally towards $2,450.

Cable may see turnaround with moderate gains

The EUR/USD pair declined on Wednesday, with the Cable approaching the key support level at 1.0810. Maintaining this level is essential for a bullish outlook. If the euro loses this floor, it may retreat towards the 200-day simple moving average at 1.0790. Continued weakness could bring the spotlight to 1.0725.

A bullish turnaround could target resistance at 1.0865, intersecting with the 50% Fibonacci retracement of the 2023 decline. A successful breakout may aim for 1.0980, the March swing high.

The forecast is neutral to cautiously bullish, provided 1.0810 support holds, with potential targets at 1.0865 and 1.0980.

Ninja may continue downward trend

USD/JPY rose on Wednesday, nearing horizontal resistance at 156.80. Bears must defend this barrier to prevent a climb to 158.00 and eventually 160.00, where intervention by Japanese authorities to bolster the yen could become a risk.

A bearish swing might find initial support at 154.65. A breach of this level could lead to a descent towards the 50-day simple moving average at 153.75, with further losses exposing trendline support just above 153.00.

See also: Japan’s Nikkei falls on Wall Street weakness and BOJ uncertainty

Late 2022, intervention near 151.00 led to a significant pullback towards 145.00. Another instance in 2018 saw a similar intervention around 114.00, resulting in a retreat to 110.00.

The forecast is bearish if resistance at 156.80 holds, with potential for a pullback towards 154.65 and below.

What to expect from Nvidia (NVDA) market performance

Nvidia CEO Jensen Huang addressed the company’s strong demand and supply issues following their impressive first-quarter earnings report. Nvidia is transitioning from the Hopper AI platform to the advanced Blackwell system. Despite concerns about a potential demand lull, Hopper demand has grown even after the Blackwell announcement.

The key financial performance indicators are striking. Q1 results topped Wall Street forecasts with adjusted EPS of $6.12 on $26 billion in revenue, marking a 461% and 262% increase from the previous year. Non-GAAP operating income was $18.1 billion. Nvidia expects Q2 revenue around $28 billion, exceeding analysts’ expectations of $26.6 billion.

Nvidia announced a 10-to-1 stock split, effective June 10 for shareholders as of June 7. The quarterly dividend increased to $0.10 per share from $0.04. Nvidia stock rose as much as 6% in extended trading on Wednesday.

Huang highlighted the importance of transitioning from AI training to AI inferencing – suggesting Nvidia’s chips’ powerful inference capabilities due to their complex software stack and model capabilities.

The customer base is broadening beyond major cloud service providers to companies like Meta, Tesla, and pharmaceutical firms, with the automotive industry being a significant user of Nvidia’s data-center chips.

Similar transitions, such as Intel’s move from the 14nm process to the 10nm process, faced supply constraints but eventually led to strong financial performance and stock appreciation. Another example is AMD’s shift from the Zen to Zen+ architecture, which also encountered initial supply challenges but resulted in increased market share and revenue growth.

Nvidia’s stock may continue to rise if it manages to meet the high demand despite supply constraints, with potential for significant market impact as it transitions to the Blackwell system.