When we reviewed the charts of the Chinese electric vehicle maker Nio (NIO) on April 26, we wrote that "We have avoided the long side of NIO for a while now, but the charts have improved and aggressive traders could go long now. Risk a close below $34. $54 is our first price target."
Let's check and see how things are progressing.
In the updated daily bar chart of NIO, below, we can see a setup of prices and indicators that could mean that the stock will accelerate on the upside. NIO has rallied back to the underside of both the 50-day moving average line and the 200-day moving average line. Ignoring the slopes of these averages for a moment, I suspect some moving average followers would soon be buyers.
The On-Balance-Volume (OBV) line shows a slightly higher low in May than April even though prices made a lower low. This divergence is subtle but could be a "tell" that buyers of NIO are back in charge. The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside for another cover shorts buy signal.