Nvidia's stock is at a make-or-break level, says chart watcher

Nvidia is having its best week in months, and the recent surge has pushed the stock to a critical level, one chart watcher tells CNBC.

Shares of the chipmaker are up 11 percent this week after Wednesday's nearly 4 percent gain. The stock has managed to regain some of its footing after several steep sell-offs in recent months pushed it 42 percent off its October high.

After inspecting Nvidia's weekly chart, Miller Tabak's Matt Maley says its stock is nearing a key level that could make or break its recent run.

"The thing is, when it stopped going down, it held right at its 200-week moving average, so that's positive. Then it kind of traded sideways for a little while, through February, which formed a nice base for the stock," Maley said Wednesday on CNBC's "Trading Nation." "Now it's starting to rally, and it's breaking back above a key level — its neckline of an inverse head-and-shoulders pattern."

Still, Maley stipulated that Nvidia's stock has to end this week above its 200-week moving average to be able to make a sustained move higher.

"The key thing is, with these necklines, if they break above them in a meaningful way, they shoot up in a major way. But if they fail, they tend to roll over. So this is a key level for the stock," he said. "And ... this is a stock that's had a lot of momentum money flow out of the stock, so if it can rally further anytime soon, that momentum money's going to flow back in and be very positive for the stock."

Susquehanna's Stacey Gilbert told "Trading Nation" that two tailwinds could help Nvidia's stock reach that key level: investors increasingly buying into large-cap technology stocks, and Nvidia's deal to buy Israeli chip designer Mellanox.

"When you think about what the market is saying, obviously, they like [the deal]," Gilbert said. "When you think about what Mellanox is bringing to the table, they have the potential to fill a revenue hole that's been lost since the crypto collapse. So, overall, I would say, from a fundamental perspective, we certainly like it."

Gilbert noted that Wall Street sentiment around Nvidia was also largely positive and could hinge on the company's analyst meeting next week.

"Investors may be hoping that the management talks about the possible synergies," she said Wednesday. "Our analyst Chris Rolland sees that as being [earnings-per-share]-upside-positive with the synergies that could happen. So, overall while it may not be our favorite name in the space, it's certainly a name that we like to own."

Disclosure: Susquehanna Financial Group is a market maker in Nvidia. SFG and/or its affiliates beneficially own 1 percent or more of NVDA's securities.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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