Why Nio Stock Looks Charged For A Drive North

The electric vehicle sector was charged up with high investor interest at the beginning of 2021 but has since cooled off.

NIO Inc. NIO settled into a long equilibrium after making a new all-time high of $66.99 Jan. 11 and declining over 50% in the weeks that followed.

The decline in stock price does not appear to be tied to the company’s performance: the Chinese electric vehicle maker’s sales are up 95.3% for the month of May from the same period in 2020, despite a small 5.5% decline in sales compared to April, which the company attributes to a change in China’s invoicing rules.

See Also: Nio Day 2021: What We Know So Far

A sentiment shift may be on the horizon for the sector and, from a chart standpoint, Nio’s stock looks ready to benefit.

The Nio Chart: Nio has been trading sideways in an equilibrium between about $30 and $44 since March 2. On May 14, Nio’s stock put in a bottom at the $30.71 mark and used the area as a launch pad, rising 42.47% in the 16 trading days that followed.

Nio has also recaptured a number of important support levels on its move north.

On May 24, Nio’s stock was able to pop up over the eight-day exponential moving average, which was the first indication things may be turning around for the stock. Since then, it has recaptured the 21-day EMA as well as the 200-day simple moving average, all which are bullish indicators. The eight-day EMA has also crossed back above the 21-day EMA, which could give bulls some confidence that strength has returned to Nio’s stock.

Bulls want to see sustained bullish volume push Nio’s stock up over resistance at the $45 area. If it can regain that area as support, it has room to move toward $49.84 before meeting another resistance level.

Bears want to see Nio reject that its overhead resistance and fall back down below the eight-day EMA. A loss of the eight-day EMA could see Nio’s stock revisit $39.49.

If Nio’s stock is unable to hold that level as support, it may need further time in the equilibrium and could drop down toward the $34 level.

NIO Price Action: Shares of Nio were trading down 0.43% at $43.50 at last check. 

Photo courtesy of Nio.