Bulls Charge Into Nio And Xpeng Following Lower Opens: A Technical Look

NIO Inc NIO, a Chinese electric vehicle manufacturer, reported first-quarter 2021 earnings on Thursday.

Nio reported a non-GAAP net loss of 4 cents per share versus the analyst consensus estimate of a loss of 16 cents per share and reported revenues of $1.2183 billion compared to the $1.02 billion estimates. The company delivered 20,060 vehicles in the quarter, which represented a 432% year-over-year increase.

Although Nio clearly beat on earnings investors and traders were spooked by the ongoing global semiconductor shortage and shares of the company opened Friday’s session down over 3% at $37.73.

XPeng Inc. XPEV opened lower in sympathy, but both stocks ran into a group of buyers. As the saying goes, “gap ups are for selling and gap downs are for buying.”

See Also: 8 Takeaways From Nio's Q1 Call For EV Stock Investors

The Nio Chart: Big bullish volume entered Nio’s stock first thing Friday morning driving its share price up 7.5% from its opening price by mid-day. Although Nio’s stock is trading down almost 40% from its Jan. 12 all-time high of $67.04, the stock formed a bullish double-bottom pattern on March 26 and April 16 indicating the bottom was in.

On Friday Nio’s stock regained the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day EMA, which is bullish. The stock is trading above a support level at $36.95 and below resistance near the $45 mark.

Bulls want to see sustained bullish volume to pop Nio’s stock up over $45. If the stock can regain that level of support, it has room to push higher towards the $55 level.

Bears want to see sellers come back into Nio’s stock for it to drop down and lose its support near $37. If the stock was unable to hold that level of support there is not much support until $27.39.

The Xpeng chart: Xpeng’s stock opened on a support level of $29.77 and bounced up from it. The stock has formed a bearish head and shoulders pattern between March 10 and Friday but there has been no follow-through as of yet. This indicates the pattern may not be recognized, likely due to Xpeng’s upcoming earnings report expected on May 13.

Xpeng’s stock is trading below both the eight-day EMA and the 21-day EMA with the eight-day EMA trending below the 21-day EMA, both of which are bearish.

Bulls want to see bullish volume come in to push Xpeng’s stock up over resistance near the $36 level. If the stock could regain that level as support, it has room to move up towards its next resistance level at $42.40.

Bears want to see Xpeng’s stock drop below support at $29.77, which would then make that level resistance. If the stock drops below that level and is unable to recapture it as support, it could fall towards $23.08 before finding another support level.