NIO (NIO) could be headed to new heights

Electric vehicle (EV) businesses have been on fire in recent months, and Chinese electric vehicle maker NIO Limited (NIO) is no exception. The stock has jumped 1,000% since May, and its upward movement may not be over yet.

When we look at the NIO price chart, the stocks are in a nice uptrend, with clear support and resistance levels. Right now, the stock is flirting with its key support area. Looked:

We have two key support lines in green. One is the horizontal line marking the previous peak before the stock erupts. This will be a key level to watch over the next few days. Then we have the upside support line highlighting the strong uptrend in the channel’s stocks, combined with the red resistance line at the top.

I have also shaded in the candlesticks with the colors from the Relative Rotation Chart, or RRG. The RRG combines the relative strength of a stock versus the S&P 500 with momentum to create a unique view of the stock. This shows that stocks tend to spin from the top of the overall market, weakening as momentum slows, eventually lagging behind the market, and then improving as momentum picks up for come back to the top of the market once again.

Right now, NIO stock is weakening, as indicated by the yellow bars on the chart. Then he would enter the lag zone before turning blue and starting to improve.

However, with volatile stock like this, you can see from the previous yellow bars that it sometimes comes back to the top. So I’m not counting much more on a drop from here, given the areas of support that are so close to the share price. Instead, I would expect the stock to do more of the same over the next few months – keep climbing.

The bottom line

NIO stock has risen over the past few months and the price chart indicates that this is likely to continue. The two main areas of support are just below the current share price, which should give it a boost in the coming weeks. In addition, the RRG shows us that the momentum has already slowed down. As it rises again, the stock will likely reach new heights in no time.