Watch these Nvidia stock price levels during the post-earnings decline

Nvidia (NVDA) shares plunged in extended trading on Wednesday after the artificial intelligence (AI) darling's quarterly results beat expectations, but investors were disappointed as the latest numbers pointed to slowing growth. The chipmaker has impressed Wall Street in recent quarters with stunning earnings reports driven by insatiable demand for AI, setting the bar high for its latest earnings release.

Although Nvidia shares have risen by around 150 percent since the beginning of the year, they have experienced significant price fluctuations in recent months. Between July and August they fell by as much as 33 percent before recovering spectacularly in the run-up to the earnings announcement and were only 11 percent below their record high by the close of trading on Wednesday.

Nvidia shares fell 6.9% to $116.95 in after-hours trading on Wednesday.

Below, we take a closer look at Nvidia's chart and use technical analysis to point out key levels to watch for in price action following the earnings release.

Expected collapse of the rectangle formation

After an impressive rebound from this month's low, Nvidia shares have been consolidating in a tight rectangle formation for the past seven trading sessions ahead of the company's highly anticipated report. Although volume remains relatively light, share turnover has increased this week, suggesting portfolio rebalancing ahead of quarterly results.

The earnings-related decline expected on Thursday will cause shares to fall below the recent rectangle and the 50-day moving average, which could trigger further weakness in the stock.

Looking ahead, investors should keep an eye on four key price levels that could play a role if the AI ​​darling's share price continues to fall after the results are released.

Nvidia price levels to watch

The first is around $116. This area could provide initial support near a trendline connecting the May peak and the high of a small countertrend relief rally in early August.

A drop below that level could send shares down to $107, a spot on the chart where buyers may be looking for entry points near a series of closely spaced trading levels for the stock between May and August.

Further selling could lead to a retest of the key $97 level, where Nvidia stock would likely find significant support near the two March highs, the first of which marked a previous record for the security.

Finally, it is worth keeping an eye on the $91 area, a lower price target predicted by extracting the July-August descending bar pattern and positioning it from the high of the recent rectangle formation. Should such a move play out, it would confirm a descending channel for the stock and could lead to a possible retest of this month's low.

The commentary, opinions and analysis expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more information.

At the time of writing, the author does not own any of the securities mentioned above.