The Nio stock price forecast as a descending wedge pattern
Nio’s share price has seen a steady rally over the past few months as investors remain bullish on the company. The stock is trading at $20.18, about 75% above this year’s low. This recovery pushed its market cap to more than $33 billion. Other EV stocks like Tesla, Xpeng and Mullen Automotive all rebounded.
Why is Nio recovering?
There are several reasons why the Nio share price has performed well over the past few months. First, China has reopened its major cities after locking them down for the past few months. As a result, the country’s economy performed relatively well during this period.
Second, after going parabolic earlier this year, the cost of key commodities has fallen sharply over the past few months. The Bloomberg Commodity Index (BCOM) has fallen more than 10% from its highest level this year. The same goes for vital metals used in the electric vehicle industry, such as nickel and steel.
Third, Nio has seen its shipments jump over the past few months. Nio delivered 10,052 vehicles in July this year, up around 26.7% on an annual basis. Deliveries were about 13,000 lower than June due to shutdowns in major cities. Analysts expect Nio to increase deliveries as supply chain issues ease.
Fourth, Nio has expanded to Europe, where it received a license to operate in 2020. This week, the company announced that it would launch its electrical products for the European market. The new factory will be in Budapest, Hungary.
Nio Share Price Forecast
The four-hour chart shows that Nio stock price formed a strong double-bottom setup at $12.45 in March and May this year. Since then, it has managed to rebound and is trading at $20.18. The current price is slightly below the June high of $24.46. It also lies along the 25-day and 50-day moving averages and has formed a descending wedge pattern.
Therefore, the outlook for Nio stock price is still bullish, with the next key resistance level to watch being $24.46, which was the June high. This view will become invalid if the stock falls below the support at $18.10.