• NIO shares retrace up to the 200-day moving average and break through.
  • XPEV announced deliveries are up nearly 500% year on year.
  • The electric vehicle company remains a retail meme stock favourite.

Update: NIO shares moved up to the 200-day moving average on Friday and stalled but Monday sees the shares smash through the level in a bullish move. NIO was boosted with good fundamental news from itself and rival XPeng on the delivery front and NIO was further boosted by an upgrade from Citi. The shares are trading at $41.69 up nearly 8% at the time of writing. Citi said in its upgrade that strong electric vehicle growth in China could add 50% to the value of NIO shares.

NIO has been a retail favourite in 2021 with the shares driven to $66.99 in mid-January but has slipped substantially since as investor enthusiasm for the EV sector has waned. Tesla, the sector leader, has been under pressure, and this has spread to the rest of the EV stocks.

Not helping the case has been mainstream auto companies announcing plans to move into the EV space. Ford held an impressive investor day on Wednesday of last week and outlined plans to move further into the electric vehicle space. Ford plans to have 40% of its lineup electrified by 2030. Similar announcements have been made by other legacy automakers recently, most notably from Volkwagen. Increased EV competition is going to be a feature of the industry going forward, and the new EV automakers such as NIO, Tesla, XPeng, LiAuto and others will have to adapt.

NIO is a Chinese electric vehicle manufacturer designing, manufacturing and selling smart EVs. NIO is also involved in the autonomous driving sector. 

NIO stock forecast

NIO shares have retraced nicely from the wedge formation FXStreet has identified and just stalled at the key 200-day moving average. This will show just how strong the recent rally has been. It is one thing to break above the 9 and 21-day moving averages but quite another to break the 200-day. Failure should see a retracement back to the 9 and 21-day levels, which are nicely correlating at $36.64.

Holding the 200-day and breaking above is a strongly bullish sign that should really result in a breakout of the wedge formation. The top of the wedge channel is a resistance set at $40.60. The Williams %R looks overbought, but neither the Relative Strength Index (RSI) or Commodity Channel Index (CCI) are confirming. But these need to be watched for signs of a possible reversal.

There are a series of support flags that worked as bullish flags on the way up in late 2020. These areas should work as support zones if the stock begins to fall, particularly if NIO breaks out of the wedge pattern. 

At the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

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