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Has NIO Finally Bottomed? Here's What the Chart Says

Shares of NIO are trying to find their footing near a key moving average. Here's what we need to see in order to call a bottom.

Have we all forgotten about NIO  (NIO) - Get NIO Inc. American depositary shares each representing one Class A 蔚来汽车 Report? As long as Tesla  (TSLA) - Get Tesla Inc. Report is in discussion, then that’s likely not the case.

NIO shares have been hammered lately, which is no surprise given the turmoil we’ve seen in growth stocks.

While the stock is off its lows, it’s still down almost 50% from its highs in January. Tesla topped out a few weeks after NIO but has struggled too, with shares currently down 34% from the highs.

Despite a solid earnings report in April and plans for expanding into Europe, NIO just can’t seem to find its groove.

With that being said, let’s not forget that NIO also rallied almost 5,000% from its October 2019 low to its high in January 2021. So it’s not surprising to see a ~50% correction off the highs.

That's particularly as other EV and growth stocks struggle. The question to ask is when will the pain end.

Trading NIO

Daily chart of NIO stock.

Daily chart of NIO stock.

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NIO stock rode the 10-week moving average to new highs for quite some time. While the correction down to this moving average looked incredibly healthy in February, the bounce was short-lived.

We saw an initial rally off the 10-week, but shares quickly lost this measure as support in the following week.

It has been resistance since, while NIO also failed to hold the 21-week moving average as support. Now down into the 50-week moving average, we’re starting to see the stock stabilize.

The stock is at an interesting juncture now. We had a tight inside week last week as NIO stock now tries to go weekly-up over $34.78.

That would eventually put the 10-week moving average in play, but not before the 10-month moving average is in play. This measure had been support all through March and April. However, Nio broke below the 10-month a few weeks ago and has struggled to reclaim it.

If we get a weekly-up rotation, see if Nio can reclaim the 10-month. Above it puts the 10-week moving average back in play.

Since we’re closing in on the end of the month in a few days, the May high at $41.45 and the May low at $30.71 will also be key over the next few weeks. 

In June, see if the stock rotates through either level. A monthly-up rotation potentially puts the 21-week moving average and $50 in play. A monthly-down rotation could put the 21-month moving average in play.