Tensions on the Nasdaq and US-China relations impact NIO

March 25, 2021 15:00

Last year, NIO was one of the main players in the stock markets with a spectacular revaluation of 1,112.24%. This year, it is one of worst-hit not only by the problems that the Nasdaq has been going through in recent weeks, but also because of the tensions in relations between the United States and China.

Joe Biden’s election has relaxed these tensions and the tariffs imposed by Donald Trump, but in the last summit between the two countries, both delegations staged verbal confrontations which delayed Joe Biden's meeting with Xi Jinping until next April, while affecting Chinese companies listed in the United States.

We have recently learned that last 2019 NIO was forced to sell equipment to rival Tesla for a value of 31 million dollars to be able to weather its financial crisis while also restructuring staff, which led the stock to hit levels far from its meteoric rise.

Technically speaking, we can see how after setting all-time highs at the beginning of the year, the trend in this company has been clearly bearish after breaking down the triangular formation that formed until the middle of last February, thus fulfilling the bearish divergence that we found in its MACD indicator.

This downward trend has been reinforced not only by the downward crossing of the 0 line in its MACD indicator, but also by the downward crossing of its short and medium-term moving averages (black and orange) until reaching its important level of support in its average of 200 sessions in the red after breaking levels not seen since November 2020 in the lower red band.

Currently, after rebounding strongly from its 200-session average that took it to its first resistance level at its 18-session black moving average, the price is in a new bearish momentum that may take it to the previous zone of lows.

It is important that we observe if the price is able to make a new bounce in its average of 200 sessions, creating a formation of change of trend downtrend to bullish denominated double bottom. On the contrary, a breakout of this level would open the doors to an even greater decline that could lead the price to lose $30 per share and seek the $25 level.

Source: Daily chart of the Admiral Markets MetaTrader 5 platform NIO from December 6, 2019 to March 25, 2021. Taken on March 25 at 12:55 CET. Note: Past performance is not a reliable indicator of future results, or future performance.

Price evolution of the last 3 years: 

  •     2020: 1112.24%
  •     2019: -36.89%
  •     2018: -8.74%trading session

During yesterday's, NIO lost more than 10% and today's pre-opening for the moment shows a fall close to 5%, which does not look like a good day for the EV company.

 

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