3 EV Stocks That Could Be Set For A Downturn

The sellers are about to hit Tesla, Inc. TSLA.

The stock has staged an impressive rally over the past week as investors think it will benefit from the $2 trillion infrastructure bill, as well as a potential Green New Deal.

But the stock may have become overextended.

The red line on the following chart marks two standard deviations above its recent 20-day average price. Shares are trading above this threshold.

These overbought conditions will draw sellers into the market as they will expect a reversion to the average. This could put a top on the shares and it could even push them lower.

lick here to check out Benzinga’s EV Hub for the latest electric vehicle news.

NIO Inc. NIO has formed a classic descending triangle pattern, which has bearish implications.

Chart patterns are illustrations of the supply and demand dynamics occurring within a market. This pattern shows buyers of NIO have been complacent. At the same time, sellers are becoming more aggressive.

See also: How to Buy Electric Vehicle (EV) Stocks

Since early March buyers have held firm at the $35 level. At the same time, sellers have been knocking the shares lower.

In mid-March, the lowest price sellers would accept for their shares was around $45. By early April it had dropped to $40. Now there are sellers willing to accept $35.

The combination of aggressive sellers and complacent buyers could drive the price lower.

Shares of Fisker Inc. FSR have broken support and could continue to trend lower.

Support forms when there are a large number of buyers that are looking to pay the same price for shares of stock. In this case, it was the $14.75 level. It was clear support through December and January.

Now that level been has broken, which means the buyers who were willing to pay $14.75 have either finished or canceled their orders.

With this demand of the market, the stage is set for a further decline in the share price.