Timing the FTSE’s Pullback

Nvidia has stormed back from its early February lows, rallying more than 20% to erase January’s sharp gap lower. But with the gap now closed, the stock has hit its first real test of resistance.

DeepSeek Reaction: Panic Fades

The initial sell-off was triggered by fears that DeepSeek’s AI breakthrough could loosen Nvidia’s grip on the industry. However, those concerns have since eased. While DeepSeek’s model offers cost advantages, it still relies on Nvidia’s GPUs, and overall AI accelerator demand remains strong. Nvidia’s software ecosystem remains a significant moat, making it difficult for the industry to shift away from its technology on a large scale. The broader takeaway? The market likely overreacted.

The Technical Significance of Gaps

Price gaps aren’t just voids on a chart—they represent key areas of supply and demand imbalance. When a stock gaps lower, it often creates a resistance zone as trapped buyers look to exit when price returns.

After rallying back earlier this month, Nvidia finally posted its first red candle the moment the gap was filled, snapping a ten-session streak of higher closes. This suggests sellers are stepping in, and the battle over direction is heating up.

Forward Scenarios: Breakout or Breakdown?

Breaking Higher: If Nvidia can push beyond the gap close, the next resistance is the late January swing high—the level that triggered the breakdown. Above that, the major hurdle remains the double-top all-time highs from the turn of the year.

Pulling Back: The rally to close the gap has formed a steep ascending trendline. A break below this could open the door for a deeper retracement, with the February swing lows as a key downside target. Given Nvidia’s multi-year uptrend, choppy consolidation phases like this are normal—but if support gives way, it could shift momentum in bears’ favour.

Nvidia (NVDA) Daily Candle Chart

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