Nvidia (NVDA) shares took a downturn on Monday, breaking a four-day winning streak in response to reports that China's Huawei Technologies is developing an AI chip aimed at competing with Nvidia's offerings.

According to the Wall Street Journal, Huawei is seeking to not only create a viable alternative to Nvidia’s high-performance chips but also engaging with various Chinese tech firms to assess the chip’s technical feasibility.

Despite a substantial 25% gain since early April, Nvidia has experienced a rough year, losing about 20% of its value since the start of 2023. A significant factor influencing the stock's pressure is the emergence of cheaper AI technologies from China and escalating federal restrictions on Nvidia’s popular H20 chip exports to China.

Monitoring Nvidia's Chart: Key Technical Insights

Let’s dive deeper into Nvidia's chart to pin down critical price levels to watch as the company's stock navigates these turbulent waters.

Falling Wedge: A Bullish Signal Ahead?

Currently, Nvidia shares are fluctuating within a falling wedge, with a bear trap forming earlier this month. This trading scenario often entices investors to sell when a support level is breached, only to see the price rebound sharply.

Recently, shares have been testing the upper trendline of this wedge, hinting at a potential bullish breakout. Additionally, the Relative Strength Index (RSI) has surged above the 50 mark, signaling strengthening price momentum.

Key Resistance Levels to Watch Closely

Should Nvidia break above the wedge's upper trendline, investors should keep an eye on the $115 resistance level, which coincides with the swing high from April and various chart retracements since last September.

A successful rise through this zone may set the stage for a surge towards $130, marking an exit strategy for those who acquired shares at lower prices, particularly near last year’s significant peak in August and the December trough.

Essential Support Levels to Keep in Mind

On the flip side, if the stock price declines, it may test support around the $96 mark. This could present a buying opportunity, aligning with last week’s swing low and two prominent peaks formed in March of the previous year.

Moreover, a decisive drop below the lower trendline of the falling wedge could lead Nvidia shares to revisit the $87 support level, which has historical relevance as it corresponds to the bear trap low and a range of price action observed between March and May last year.

As the situation evolves, investors should remain vigilant in monitoring these crucial price levels that could significantly influence Nvidia’s market trajectory.