Nio Inc. – ADR (NYSE: NIO) seems to be poised for a price surge as per its latest charts. The company designs, develops, manufactures, and sells smart electric vehicles in China. Nio Inc. offers five, six, and seven-seater electric SUVs, as well as smart electric sedans. It is also involved in the provision of energy and service packages to its users.
The stock was a part of our recent watchlist for breakout stocks.
Bullish Indications
#1Channel Breakout: The daily chart shows that the stock was trading within a downtrend channel for the past several months. It has currently broken out of this downtrend channel. The channel is marked in the chart as purple color lines. Once a stock breaks out from a downtrend channel, it has the potential to move further up.
NIO – Daily Chart
#2 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#3 Bullish ADX: The ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has started to move up from below –DI and +DI lines. This indicates possible bullishness.
#4 Bullish RSI: In the daily chart, the RSI is currently above 50 and moving higher. This is a possible bullish sign.
#5 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. These levels provide signals for traders to enter new positions in the direction of the original trend. The stock had taken support at the 23.6% Fibonacci support level before moving higher, as seen in the weekly chart. This indicates bullishness.
NIO – Weekly Chart
#6 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart, and is also moving higher from oversold levels. This is a possible bullish indication.
#7 Bullish RSI: In the weekly chart, the RSI is currently moving higher from oversold levels. This indicates that the stock may move higher soon.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of NIO above the price of around $23.00.
TP: Our target prices are $27 and $33 in the next 3-6 months.
SL: To limit risk, place stop-loss at $20.80. Note that the stop-loss is on a closing basis.
Our target potential upside is 17% to 43% in the next 3 to 6 months.
For a risk of $2.20, our target rewards are $4.00 and $10.00. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the trend channel with a high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
— Tara
Legendary Stockpicker: "Buy this A.I. stock NOW" [sponsor]His award-winning system pinpointed NVDA and META before both stocks doubled. Now it's flashing "BUY" on this under-the-radar A.I. stock. MORE HERE...