Nio Inc - ADR (NYSE:NIO) opened higher on Thursday but a lack of bullish momentum caused the stock to reject near Wednesday’s high-of-day and begin to sell off slightly.

A retracement to the downside, or at least a period of consolidation, is needed because Nio has soared about 25% higher in an uptrend over the last four trading days within printing a higher low on the daily chart.

An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.

The higher highs indicate the bulls are in control while the intermittent higher lows indicate consolidation periods.

Traders can use moving averages to help identify an uptrend, with rising lower time frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend.

Rising longer-term moving averages (such as the 200-day simple moving average) indicate a long-term uptrend.

A stock often signals when the higher high is in by printing a reversal candlestick such as a doji, bearish engulfing or hanging man candlestick. Likewise, the higher low could be signaled when a doji, morning star or hammer candlestick is printed. Moreover, the higher highs and higher lows often take place at resistance and support levels.

In an uptrend the "trend is your friend" until it’s not and there are ways for both bullish and bearish traders to participate in the stock:

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The Nio Chart: Nio’s most recent higher low in its downtrend was printed on June 16 at $18.47 and the most recent confirmed higher high was formed at the $20.26 mark the day prior. If Nio is unable to surpass Thursday’s high-of-day over the coming days, the $23.21 mark may serve as the next higher high.

Photo: Nio ET5 courtesy Nio