$NIO Bull Flagging

2021年11月27日

NIO - Chinese Electric Vehicle Maker

From a technical perspective, this stock looks nicely set-up for another leg higher. If we zoom out from the chart above to the Monthly and Weekly time-frames, we see this same bull flag consolidating above major support at roughly $30. It is always a great sign to see confluence of trading signals when zooming out to the higher time-frames. Ideally, that is what you want in a trade (i.e. as many indicators and time-frames saying the same thing). For me personally, I like to see confluence from the monthly all the way down to the hourly and 30-minute charts. Those have historically been the best set-ups for my system.

Looking at the Daily chart, I can see some resistance at roughly $45, $47, $50, and then $55. If the stock got above $55, then $60 is like a magnet for price and would come relatively quickly I believe. Then above $60 we would test the all-time highs of $65, and if we get above I see a price target of ~$100, which is a measured move based on the $35 range of the wedge pattern that has formed.

Considering we are near the upper end of the range of the pattern, now would not be the best time to buy, considering we could drop back to support near $35 or go as low as $30-$31. These price levels would be good spots for low risks trades back up towards the downtrend line near $40. These levels could also be utilized for a low risk longer term trade/investment, as the risk is very clearly defined.

I see numerous other trades that could materialize, one being the breakout over $45. This should then trigger long side buying momentum, and one could target $47, $50, $55, $60, and eventually even $65 if we get there. I would sell majority of my position within that range, and leave a small runner for that $100 price target. It's always best to lock in gains, leaving a small runner so we can still participate in any further upside of the trade, while also freeing up capital to put to work on other trades/pay ourselves for the hard work of trading.

A wise trader once told me; "Never try to guess a top or bottom for exiting a trade; leave a small runner, and let the market take you out. This is how great trades can turn into spectacular ones."

From a fundamental perspective, the EV space is certainly a hot sector right now, and this stock has gotten attention before from both institutional players and the retail crowd. As the US government continues to push and incentivize the transition to EV's, and with the Biden admin being weaker on China vs the Trump admin, I think NIO has a solid economic and political landscape behind it to propel the stock higher.

Full Disclosure: I am not an advisor/financial planner, these are strictly my ideas and are not meant in any way to be financial advice. Trading and investing carry substantial risk of loss and should only be done by those whom have the financial capacity to handle losses. I have no financial interest or connection in this company, and I am not a licensed financial analyst. Past performance is not indicative of future results.