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Nio Stock Drops Below Key Support: Technical Levels To Watch

Nio, Inc. (NASDAQ: NIO) shares have been locked in a lackluster phase ever since early February, when they pulled back after completing a head-and-shoulders pattern.

05/11/2021 15:20

Nio, Inc. (NASDAQ:NIO) shares have been locked in a lackluster phase ever since early February, when they pulled back after completing a head-and-shoulders pattern.

This is despite the positive news flow that has been coming from this NYSE-listed Chinese electric vehicle manufacturer.

Nio's Lackluster Stock Run: After peaking at $66.99 Jan. 11, in reaction to a slew of announcements made at the Nio Day event, the shares lost momentum.

Worries concerning stretched valuations and an across-the-board tech sell-off sent the stock reeling to a low of $35.21 on March 8.

Although the stock bounced off this bottom, it never really picked up enough momentum to push convincingly past a long-term resistance around $46.

Bouncing between the low and the high, the stock managed to complete a triple-top formation by mid-April. Given that the formation is a pointer toward a possible rebound, it was expected that Nio would take off from there.

In a subsequent short rally, the stock did go up to $42.62 before reversing course again.

Related Link: Tesla's Battery Charging Vs. Nio's Battery Swapping: What Investors Should Know

Nio Stock Overlooks Fundamentals: Nio has been reporting stellar monthly deliveries since the start of the year, and in late April, the company reported forecast-beating first-quarter results and guided to fairly robust deliveries for the second quarter.

In China, the company has struck a partnership with Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) to expand its battery swapping infrastructure.

The company officially announced last week its expansion into Norway and signaled it will explore more overseas markets in the near-to-medium-term.

Market pessimism toward the stock suggests investors are overlooking the fundamental strength of this manufacturer of premium EVs.

Nio Pulls Below Key Support: On Monday, Nio stock pulled below a key support around $35.50. It is trading below its 50-day as well as 200-day moving averages in a one-year chart.

If the sell-off continues, key downside support areas to watch for will be around $28.50 and $21.50.

The 14-day RSI, a key momentum indicator, suggests the stock is in oversold territory. If buying sets in to take advantage of the oversold stock, it is likely that the stock will push past the near-term resistance around $35.50. Other key resistance areas are around $39.50 and $44.

NIO Price Action: Nio shares were trading 2.21% higher at $35.09 at last check Tuesday. 

Related Link: Nio's Battery Swaps Dampen Global Ambitions: Ark Invest Analyst

Photo courtesy of Nio.