On Sunday evening, Benzinga asked its followers on Twitter (NYSE:TWTR) what they’re buying at the open on Monday. From the replies, Benzinga selected one ticker for technical analysis.
@solarzanomarco (Marco) and @reinaldo_coser (Reinaldo Cóser) are thinking of buying Nio, Inc (NYSE: NIO).
Nio plunged 6.96% during Friday’s trading session and on Monday in the premarket, the stock was trading about 1% lower compared to the S&P 500, which was trading slightly higher.
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Nio has been trading in a fairly consistent downtrend since June 27 after a bullish cycle, which began on May 12, caused the stock to soar 109%. Generally speaking, the downtrend has seen decreasing volume, which indicates a reversal may be setting up, however, Friday’s bearish price action came on higher-than-average daily volume, which will likely make bullish traders cautious.
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The Nio Chart: Nio’s most recent lower high within its downtrend was printed on Thursday at $21.17 and the most recent lower low was formed at the $19.52 mark on July 19. On Friday, Nio fell under the most recent confirmed lower low, but Monday’s candlestick will need to suggest whether there’s more downside ahead before a reversal into a bounce.
- Nio has been trading under a descending trendline since July 1, 2021, and when the stock attempted to break up above the area June 24, June 27 and July 8, Nio rejected and wicked from the trendline. More conservative bullish traders may want to see if Nio bust up through the trendline before taking a position.
- When Nio fell lower on Friday, the stock tested and held support at the 50-day simple moving average (SMA), which is a positive sign for the bulls. Bullish traders would like to see Nio continue to hold that level as support and then for big bullish volume to come in and break Nio up to print a higher high, in order to negate the downtrend.
- Bearish traders want to see Nio fall below the 50-day SMA, which would indicate longer-term sentiment has turned bearish. If Nio is able to negate its downtrend for a period of time, Bearish traders will want to see Nio continue to reject the descending trendline.
- Nio has resistance above at $20.25 and $21.77 and support below at $16.75 and $14.31.
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