Why Nio Stock Needs To Recover This Support Level - NIO (NYSE:NIO)

Nio Inc. (NYSE:NIO) shares reew trading higher Wednesday after the company received positive analyst coverage from Macquarie.

Analyst Erica Chen initiated coverage on Nio with an Outperform rating and announced a $37.70 price target. The Macquarie analyst also initiated coverage on XPeng and Li Auto with Outperform ratings.

Nio stock was up 4.51% at $31.38 Wednesday afternoon.

Nio Daily Chart Analysis

Shares are hanging below pattern support in what traders call a pennant pattern. The price was getting condensed between narrowing highs and lows and was unable to hold above the support level. This is a hint that the stock may be becoming bearish unless it can recover the support line once again.
The stock trades below both the 50-day moving average (green) and the 200-day moving average (blue). This indicates bearish sentiment, and each of these moving averages may hold as an area of resistance in the future.
The Relative Strength Index (RSI) has been forming higher lows and pushing higher the past few weeks and now sits at 48 on the indicator. This shows buyers have been moving into the stock and buying pressure almost equals selling pressure, although there are still slightly more sellers in the market overall.

What’s Next For Nio?

Nio falling below the pattern was a bearish sign for the stock, but not all hope is lost as it may still be able to recover and cross back above the support line. If the price can form higher lows and the RSI can cross back above the middle line it may be able to see a recovery.

Bulls are looking for the higher lows and the cross back above support, and then are looking to see a cross above the moving averages and a possible break of resistance.

Bears are in control of the stock and are looking to see it continue to hold below the pattern support and the moving averages. This could bring about a strong bearish move at some point in the future.

Photo courtesy of Nio.

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