First, NIO is trading under the resistance at the green line $ 49.36, and above the 21 , this means that NIO is inside a Trap Zone. It could breakout to any direction, but since the trend is , the odds favor the bulls here.
If it loses the 21 , then a retest of the red line around $ 42.51 is the most likely scenario.
Now, some of you are concerned about a pullback here, so let’s see the now:
Ok, NIO is doing what seems to be a time correction, meaning that is moving sideways, waiting for the 21 to reach the price, instead of dropping to the 21 .
This shows a lot of resilience, and we have no reason to worry. The volume is decreasing during this correction, which is natural. As we discussed in my Tesla analysis, according to the 5th tenet of the Dow Theory, the must confirm the trend. A correction with low is a harmless and acceptable movement, according to the .
In fact, this movement is quite similar to what Tesla did a few months ago. Maybe we'll have the same behaviour here.
Either way, the 21 is here to hold the price if it drops more and would be a perfect buy opportunity.
Now, the weekly chart:
The trend is very , and very strong here. Again, pullbacks would just offer opportunities to buy, but so far, we have no pullback sign here.
Maybe if NIO loses the previous week’s low, we would see a decent pullback, but this is just a theory. Now is time to manage positions here, and keep in mind the points mentioned in this analysis.
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Have a great weekend.