Why Nio Stock Looks Charged For A Drive North

The electric vehicle sector was charged up with high investor interest at the beginning of 2021 but has since cooled off.

NIO Inc. NIO settled into a long equilibrium after making a new all-time high of $66.99 Jan. 11 and declining over 50% in the weeks that followed.

The decline in stock price does not appear to be tied to the company’s performance: the Chinese electric vehicle maker’s sales are up 95.3% for the month of May from the same period in 2020, despite a small 5.5% decline in sales compared to April, which the company attributes to a change in China’s invoicing rules.

See Also: Nio Day 2021: What We Know So Far

A sentiment shift may be on the horizon for the sector and, from a chart standpoint, Nio’s stock looks ready to benefit.

The Nio Chart: Nio has been trading sideways in an equilibrium between about $30 and $44 since March 2. On May 14, Nio’s stock put in a bottom at the $30.71 mark and used the area as a launch pad, rising 42.47% in the 16 trading days that followed.

Nio has also recaptured a number of important support levels on its move north.

On May 24, Nio’s stock was able to pop up over the eight-day exponential moving average, which was the first indication things may be turning around for the stock. Since then, it has recaptured the 21-day EMA as well as the 200-day simple moving average, all which are bullish indicators. The eight-day EMA has also crossed back above the 21-day EMA, which could give bulls some confidence that strength has returned to Nio’s stock.

Bears want to see Nio reject that its overhead resistance and fall back down below the eight-day EMA. A loss of the eight-day EMA could see Nio’s stock revisit $39.49.

If Nio’s stock is unable to hold that level as support, it may need further time in the equilibrium and could drop down toward the $34 level.

NIO Price Action: Shares of Nio were trading down 0.43% at $43.50 at last check. 

Photo courtesy of Nio.