The recent drop in Nvidia's stock price has taken many investors off guard. The shares of the semiconductor giant slipped 5.55% last Friday after hitting new all-time highs at $974 on the same day. After the resumption of the selling spree on Monday, the stock opened 2.2% higher on Tuesday.

At press time, NASDAQ: NVDA is trading at $875 as the sellers stepped in around the daily highs of $882. The bearish price action in the last few days can be linked to multiple technical and fundamental factors, including the recent concerns from Wall Street analysts and the formation of a bearish pattern on the chart.

CPI Inflation Rose 0.4% In February

The CPI data for February 2024 was released today. The data showed that the YoY inflation rose 3.2% in the second month of 2024 compared to 3.1% in 2023. On an MoM basis, the prices increased by 0.4%, which was in line with the market expectations. The benchmark indices turned green after the release of the CPI report, suggesting that market participants remain optimistic about the rate cuts in June.

As per the CME Fed Watch Tool, there is a 70% probability that the Fed will start cutting rates in June 2024. However, if we get the same CPI number for March, these expectations may fall dramatically.

Nvidia Stock Price Forms Engulfing Candle

After a sharp rejection from the $974 level last week, the NASDAQ: NVDA chart has formed a bearish engulfing candle on the daily chart. These candles are often formed at the market tops and are considered to be strong reversal signals.

However, Nvidia stock price prediction hasn't flipped bearish yet, as the bullish market structure is still intact. The stock has found a short-term support of around $840. A breakdown below this level may push it toward the demand zone close to $770. This will also be very close to the recently left price gap below $740, which has caused a massive price imbalance and might attract price toward it.