The Nio share price is trading 0.36% lower after opening the NY session with a downside gap. However, the bulls appear to be coming on strong as they seek to close this gap and defend the lower border of the emerging pennant.
The Nio share price had fallen heavily on Friday after renewed fears of the company’s growth outlook emerged following China’s renewed surge in COVID-19 cases. Nio fell 6.96% amid a selloff in EV stocks.
The stock is also facing pressure after the law offices of Howard G. Smith announced that it was investigating the company for possible violations of federal securities laws. The investigation is being done at the behest of a segment of the company’s investors.
The investigation comes amid a 28 June report by Grizzly Research which claims that Nio was using a third party to inflate its revenues and profits. Nio said it would investigate the allegations. The news caused a 9% drop in the Nio share price on 11 July. The law firm says this price drop caused financial injury to investors.
The Nio share price is currently fighting against these headwinds and needs to overcome them if the pennant pattern is to play out as expected.
Nio Share Price Forecast
The price action is challenging the 19.48 support level following Friday’s downside violation of that pivot. If the bulls fail to defend this support, the 17.87 support mark (12 April and 10 June lows) becomes the next target for the bears. A further decline brings 15.88 into the mix, being the site of prior lows of 28 April and 13 June 2022. Additional targets to the south are found at 14.31 (26 May low) and 13.16, where the prior low of 15 March is located.
On the other hand, fulfilment of the bullish breakout expectation for the evolving bullish pennant requires a bounce on the 19.48 support level and
eventual break of the pattern’s upper border and the 22.26 resistance (23 June low and 5 July high). This scenario will see the 20 December 2021/10 January 2022 lows at 27.81 emerge as the site of the measured move’s completion. This move must take out the intervening barriers at 24.05 (5 April and 24 June highs) and 26.26 (10 February/17 February 2022 highs) to attain completion. Any further price advance beyond this point makes 30.57 (17 December 2021 high) and 33.15 (30 December 2021 high) additional harvest points for the bulls.
Nio: Daily Chart
