Nio Inc (NYSE: NIO) shot up over 8% higher at one point on Wednesday before falling to close the trading day mostly flat. On Thursday, the stock was rising slightly, showing strength compared to the general market, which saw the S&P 500 declining for the third straight day.
The general markets have been difficult for traders and investors recently, with the S&P 500 often showing little in terms of direction, creating traps for both bullish and bearish traders.
The Shanghai-based electric vehicle manufacturer delivered 7,024 vehicles in May, up only 4.7% year-over-year. China-based companies have struggled recently amid surging COVID-19 cases, which forced officials to lockdown Shanghai and a number of other cities earlier this year.
Nio has also suffered drawbacks as China’s regulatory crackdowns continue to spook investors. The stock has been trending higher lately, overall, and if Nio can regain a key indicator as support, a bull cycle for the stock could resume.
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The Nio Chart: On Thursday, Nio was attempting to regain support at the 50-day simple moving average (SMA), which the stock hasn’t traded above the indicator since April 5. The 50-day SMA is considered to be an effective indicator to assess the longer-term trend of a stock.
- If Nio is able to regain the 50-day as support, the stock could gain momentum to the upside because Nio is already trading in a confirmed uptrend. Nio’s most recent confirmed higher high was printed on May 20 and $17.60 and the most recent higher low was formed at the $14.09 mark on May 25.
- The low-of-day created on Thursday could form the next higher low within the pattern, indicating a higher high may be in the cards over the next few trading days.
- Nio has a gap above between $26.41 and $27.22. Gaps on charts fill about 90% of the time, indicating the most likely scenario is that the stock will rise up to fill the empty trading range at some point in the future. If Nio soars up to fill the gap, it would represent about a 50% increase from the current share price.
- If Nio closes the trading session near its high-of-day price, the stock will print a hammer candlestick, which could indicate higher prices will come again on Friday. If the stock closes the trading session near its low-of-day price, it may print a shooting star candlestick, which would suggest the stock will trade lower on Friday.
- Nio has resistance above at $20.25 and $21.77 and support below at $16.75 and $14.31.
See Also: Ford CEO Says Chinese EV Makers 'Incredibly Undervalued'
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