• NIO shares up 4% on Wednesday as the stock recovers ground lost.
  • NIO stock had been trending up nicely from May lows.
  • XPeng (XPEV) to list in Hong Kong according to reports.

Update 2: NIO shares continued to make progress on Wednesday with the Chinese electric vehicle maker up nearly 4% with just over one hour left in the session. Tuesdays high needs to be retaken ($46.55) to register a bullish engulfing candle. Otherwise it looks like being an inside candle with resulting indecision. So we wiat for further clarity which will hopefully arrive on Thursday.

Update: NIO shares bounced on Wednesday as the sector got a boost from XPeng (XPEV). The NIO electric vehicle peer is due to list on the Hong Kong exchange and was up nearly 5% on Wednesday. NIO had suffered on Tuesday but Wednesdays sees a retracement to the 9-day moving average. Tuesdays high needs to be retaken at $46.55 to push the move on. 

NIO shares got stuck in reverse on Tuesday as the stock dropped $5 to close at $44.10. Not too unexpected though as NIO stock has had a decent rally from the $30 low set in mid-May. The rally caught the eye of Citibank, who saw 50% upside for the stock in their most recent upgrade. NIO was charged up and ready for a drive higher on the back of some strong data in early June. Delivery data was strong, and Citi said "expect NIO's monthly new order volumes in May-Jun[e] to be 20-30% higher than the average monthly level in 4Q20 peak season." LiAuto (LI) chimed in with its own strong numbers as deliveries of the company's Li ONE model rose by 101% YoY. Xpeng (XPEV) CEO Brian Gu said, “We are on track to meet or exceed second-quarter delivery numbers, which I think means Chinese EV demand is still very strong.” All in all, there is plenty of positive news flow for the Chinese electric vehicle sector.

All good things come to an end, however, and so it was for NIO on Tuesday. The biggest down day in over a month. Now is this a mere correction or the start of something more bearish?

NIO statistics

Market Cap $72.9 billion
Enterprise Value $56 billion
Price/Earnings (P/E) -137

Price/Book

17
Price/Sales 23.5
Gross Margin 15%
Net Margin -36%
EBITDA -4.6 b Yuan
Average analyst recommendation and price target Buy $52.89

NIO stock forecast

Tuesday's price action saw NIO stock lose the 9-day moving average, a key level for short-term traders. As can clearly be seen from the chart below, this had been holding the price trend from the crossover in late May and guided traders to stay on the long side and ride the trend higher. Now NIO has broken the support, putting the trend in doubt. The move was actually hinted at by Friday's red candle, the initial early Friday promise diminished with a low close, giving a sign for a possible reversal. Traders should have been on heightened alert then on Monday and straight from the open NIO shares looked bearish, not even attempting to look at Friday's highs. So for now we have a new series of lower lows and highs and have broken the 9-day moving average. What does that tell us? Well, it is a beginner downtrend, so we need to see how it plays out. Tuesday's price action and point of control were to the low of the range, adding to the new bearish sentiment. The 100-day and 21-day moving averages converge at $42.97, so this is the next level to watch. A break confirms the new bearish trend is gaining strength. Below that the 200-day moving average sits at $40.78. 

Look carefully at Wednesday's candle for further clues. Taking out Tuesday's highs would mean the bullish trend is back on. Otherwise, the levels mentioned above should be the targets. Traders should prefer to enter longs at the 200-day MA, but every trader is different. Being aware of the key levels is necessary for managing risk.

 

 

 


Like this article? Help us with some feedback by answering this survey:

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD renews 22-year low as yields propel DXY, focus on ECB vs. Fed drama, energy crisis

EUR/USD renews 22-year low as yields propel DXY, focus on ECB vs. Fed drama, energy crisis

EUR/USD takes offers to refresh multi-year low during seven-day downtrend. US Treasury yields rally to fresh cycle highs amid fears of economic slowdown, hawkish central banks. Energy crisis in Eurozone joins fears of more drama on the Russia-Ukraine issue to keep bears hopeful.

EUR/USD News

GBP/USD bears approach 1.0600 in search of fresh record low, UK’s fiscal plans, Fed’s Powell eyed

GBP/USD bears approach 1.0600 in search of fresh record low, UK’s fiscal plans, Fed’s Powell eyed

GBP/USD remains on the back foot while reversing the previous day’s corrective bounce, taking offers near 1.0630 during early Wednesday morning in Europe. The Cable pair respects the US dollar’s latest run-up amid the rush for risk safety, as well as downbeat economic prospects for the UK.

GBP/USD News

Gold aspires to test $1,620.00 as yields soar, Fed Powell’s speech eyed

Gold aspires to test $1,620.00 as yields soar, Fed Powell’s speech eyed

Gold price is oscillating around $1,625.00 after dropping below the consolidation range of $1,626.83-1,632.72 in the Asian session. The precious metal is continuously declining after facing barricades above $1,640.00.

Gold News

Dogecoin price provides sidelined buyers another opportunity before a 50% rally

Dogecoin price provides sidelined buyers another opportunity before a 50% rally

Dogecoin price undid its gains seen between September 21 and 24 as it came tumbling down, following the footsteps of Bitcoin price. This downtrend has provided sidelined buyers a chance to accumulate before the inevitable explosion of bullish momentum that triggers an exponential rally. 

Read more

Lower gas prices and favorable views of labor market again boost confidence

Lower gas prices and favorable views of labor market again boost confidence

The Consumer Confidence Index rose to its highest level since April, and now sits more than 12 points higher than where it was just two months ago. Falling gasoline prices and a still-tight labor market are the main reasons we have seen a recent rebound in confidence.

Read more

Forex MAJORS

Cryptocurrencies

Signatures