NVIDIA (NASDAQ: NVDA) stock is quoted at $177.64 on the 2-day chart, an increase of 5.31% in recent days but still 6% lower year-to-date. April is a unique moment for the stock. The conflict with Iran may subside within a few weeks, the FOMC meets on April 28-29 – possibly Jerome Powell's last meeting as chairman – and the positioning for the earnings season in May is already starting to build up.
The technical structure, options data, and institutional cash flows each show a different picture of what April may bring. The causes and connections between these factors limit the scenario to two possibilities.
Bearish pattern without institutional support
On the 2-day chart, the NVIDIA price is seen within a head-and-shoulders pattern. The head peaked at $197.72, which was on the day of the last quarterly figures at the end of February. The right shoulder is now forming, and the pattern suggests a possible drop of 15% if the neck line is broken.
Chaikin Money Flow (CMF) – an indicator that measures institutional buying and selling pressure – is at -0.08. This indicator remained negative for most of March and April, indicating that large players do not support the rise of the past five days. CMF began to rise slowly around March 27 but did not go above zero. The last time CMF was even slightly positive was around February 25 during the figures, but it quickly turned down again.
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This tells a clear story. Institutional confidence is primarily present around quarterly figures, not outside of them. Any bounce while the CMF remains negative increases the chances that the right shoulder will be further built, rather than breaking the pattern. The head at $197.72 is the level that would invalidate this pattern. As long as the price remains below it, the bearish pattern remains intact.
The economic reason behind the negative CMF is related to the macroeconomic background. Oil above $111 keeps inflation expectations high, making the Fed unlikely to lower rates quickly. Higher rates for a longer time lead to lower valuations of growth stocks like NVDA. A stronger dollar further pressures international revenues. This macro-counterforce explains why institutional money is not entering despite the rise, and you can see that reflected in the position of option traders now.
Option traders are hedging more and speculating less
The put-call ratio data from Barchart shows a significant shift compared to the previous quarterly earnings season.
On January 7, when the NVIDIA price was at $189.11, about seven weeks before the figures of February 25, the put-call volume ratio was 0.53. Nearly twice as many calls as puts were traded, indicating strong bullishness. The open interest ratio was at 0.88.
On April 6 – with a similar outlook on the figures in May – the volume ratio has risen to 0.78. The difference between call and put activity has therefore become much smaller. The open interest ratio is now at 0.87, which means that long positions remain, but that new bullish positions are decreasing and defense is actually increasing.
The shift from 0.53 to 0.78 does not mean that the market has directly become bearish. It primarily indicates that the easy bullishness from the previous cycle has disappeared. Traders are opting for protection more often and less for pure speculation, which also fits with the negative CMF signal.
The Implied Volatility (IV) Percentile – which shows where current options volatility stands compared to the past year – is only 16%. The IV Rank, which looks at the position of IV between its 52-week high and low, is only at 8.10%.
When IV is this low, the market is complacent. Any surprise – from Iran de-escalation and lower oil prices to a sudden policy change or unexpected news around the figures – can cause strong movements, as these scenarios are not priced in.
The combination of cautious put-call ratios and compressed IV forms a paradox. Traders are positioned defensively, but the options market does not reflect the magnitude of potential events that may come in April. This difference means that price levels themselves will determine which scenario will play out.
NVIDIA price levels that determine April
The 2-day chart with technical levels shows the range of the month.
The NVIDIA share price is at $177.64, almost exactly at the important technical level ($177.03). The first resistance is $184.91 at the 0.618 level, one of the strongest technical zones. A breakout above would be the first real test of the upper range and could push the price towards $190.53. The peak at $197.72 is the level that completely invalidates the pattern and turns the structure bullish.
If the situation with Iran eases by the end of April and the oil price falls, that scenario gains strength. Lower energy prices would reduce inflation concerns, lead to earlier expectations of rate cuts, and increase the valuation of growth stocks. Due to the low implied volatility (IV), such a catalyst would have a stronger effect, as options are not yet pricing it in.
On the other hand, if the level of $172.14 (0.236 level) is lost, it likely means that the right shoulder was already at $177.97. The neck line is around $161.35. A clear drop below the neck line activates the 15% predicted movement and could push the price towards $137.35.
That bearish scenario becomes more likely if the war lasts longer, oil stays above $110, and the FOMC uses strict language on April 28-29. In such a situation, the already cautious options market will lean even more bearish, and the institutional money – which according to the CMF is currently lacking – will remain on the sidelines.
April is therefore likely to be determined by which catalyst comes first. Less tension in Iran and falling oil prices could lead to a rise towards $184 and $197. If the conflict continues and the Fed is strict, a decline towards $161 and a test of the neck line is more likely. The shift in put-call ratio and low IV indicate that the market has not yet made a clear choice, which means this month could sharply swing in both directions.