Shares of the Chinese EV manufacturer Nio (NIO) have begun trading on the Hong Kong exchange. While this news may have been discounted Wednesday it caused us to take a closer look at the charts and indicators.
In the daily bar chart of NIO, below, we can see that the shares have been in a downtrend since early July. Prices are trading below the declining 50-day moving average line and the bearish but slower-to-react 200-day line.
The On-Balance-Volume (OBV) line shows weakness from November. The 12-day price momentum study shows higher lows from December to March, telling us that the pace of the decline has been slowing down. This is a bullish divergence when this indicator is compared to the price action, which shows lower lows being made.
In the weekly Japanese candlestick chart of NIO, below, we can see that prices corrected around two-thirds of the advance and this becomes an area that is sometimes considered support. We will see. The size of the recent real bodies of the candles has become small like spinning tops and that means we are seeing a balance between bulls and bears and thus a potential turning point. The slope of the 40-week moving average line is negative.
The weekly OBV line is unbelievably steady. The Moving Average Convergence Divergence (MACD) oscillator is bearish but it has been narrowing.
In this daily Point and Figure chart of NIO, below, we can see a downside price target of $8. We can also see that a trade at $23 will likely turn this chart more positive.
Bottom-line strategy: We have some clues that NIO could make a recovery rally. Aggressive traders who are nimble could go long NIO at current levels risking a close below $17 -- a new low close. A rebound to the $30 area is possible.
