Nio Soars and Could Double From Current Levels

Charts of the Chinese EV company are very strong.

The EV (electric vehicle) industry has become a hot topic for investors and traders as Tesla Inc. (TSLA) soars well past the magic $1,000 level. Traders have also piled into ADRs of Nio Inc. (NIO) . Let's check out the charts of this position in the Stocks Under $10 portfolio to see what all the fuss is about and whether it can last.

In the daily Japanese candlestick chart of NIO, below, we can see that the shares have soared sharply the past two months. There was another big percentage gain rally back in November to January but prices corrected lower into March.

Trading volume was heavy in January and February and the turnover has been heavy since late May. The On-Balance-Volume (OBV) line has been strong since October and tells me that buyers have been very aggressive. We can see a number of price gaps or voids on this chart telling us that buying has been very strong.

The moving averages have positive slopes but we do not have much price history to declare that prices are extended above these averages. The Moving Average Convergence Divergence (MACD) oscillator has been very bullish since late April. 

 

In the weekly bar chart of NIO, below, we can see what looks like a base pattern or a saucer pattern from February 2019. Prices are above the rising 40-week moving average line.

 

The weekly volume pattern shows very strong volume on the right half of the saucer -- this is typical and bullish. The MACD oscillator is bullish and rising strongly. 

 

 

 

In this Point and Figure chart of NIO, below, we used daily price data. No gaps are shown on this kind of chart. The software has projected a possible upside price target in the $22 area. 

 

 

 

 

Bottom-line strategy: The charts of NIO are very strong. If you put aside worries of buying shares in a Chinese company and hype around EV and trade spats, etc. you will have an easier time going long. Aggressive traders could try to go long closer to $10 if possible risking a close below $8. The $22 area is our price target for now. (Personally, I am waiting for Volkswagen's ( VLKAF) new ID.3 EV to come to the U.S.)

 

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