Nio stock price rebounded on Wednesday, reaching its highest point since April 29. This rally may continue as the Chinese EV company has formed a cup-and-handle pattern, a common continuation sign in technical analysis.
Nio Stock Price Technical Analysis as Cup and Handle Points to a Surge to $10
The daily chart reveals that the Nio share price formed a golden cross pattern on March 26 as the 50-day and 200-day Exponential Moving Averages (EMA).
This pattern is one of the most common bullish continuation signs in technical analysis. For example, the last time this pattern formed was in August last year and the stock jumped by 35% after that.
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Most notably, the stock has formed a cup-and-handle (C&H) pattern, a common bullish continuation sign. Its upper side was at $7.13 and the lower side was at $4.64, giving it a depth of nearly 40%. Measuring the same distance from the cup’s upper side of the cup gives it a target of $10.
Nio stock chart | Source: TradingView
Tesla Rival Has Become One of the Fastest-Growing EVs
The ongoing Nio share price surge is because it has become one of the fastest-growing electric vehicle (EV) companies in the world despite the ongoing challenges.
Its recent numbers showed that it sold 29k vehicles in April, a 22% annualized increase, a sign that demand continues rising. In contrast, companies like XPeng, BYD, and Li Auto reported a deceleration in sales. It sold over 112k vehicles YTD, a 71% surge.
The most recent financial results revealed that Nio’s revenue surged by 75% in the fourth quarter to over $4.9 billion, while its gross profit jumped to $868 million. Its net profit moved to $40 million, the first time it delivered a profit and the management believes that the trend will continue.
Nio’s stock also jumped after its L60 joined the Qingdao police as part of its fleet. The company is hoping to become one of the providers of fleet vehicles to the Chinese government over time.
The next important catalyst for the Nio stock price will be the upcoming financial results, which will come out on May 21st. Analysts are optimistic that its revenue growth continued in the first quarter, helped by the diversity of its models: Nio, Onvo, and Firefly.
Analysts expect the upcoming report to show that its revenue jumped by 109% in the first quarter to over CNY 25.2 billion, with the guidance for the annual revenue being CNY 130 billion. In contrast, most EV companies experienced either a deceleration in sales during the quarter.
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