Stocks of Chinese electric vehicle manufacturer Nio (NYSE 🙂 are gaining traction. The stock's rise is a result of recent rumors that Apple (NASDAQ 🙂 could partner with the Shanghai-based company as the iPhone maker – according to a previous rumor reported by Reuters – targets}} auto production.
According to the Reuters report, Apple plans to launch its own self-driving electric car by the end of 2024. Analysts predicted that the Cupertino, California-based company could partner with an existing automaker, such as Nio, Xpeng (NYSE :), Volkswagen (OTC 🙂 or even Tesla (NASDAQ: {{13994 | TSLA). Since then, the internet has been inundated with speculation that Nio is the one.
The old Wall Street adage says, "Buy the rumor, sell the news," but this is a rumor of mega trouble. While it hasn't been confirmed, the good news is fundamentally that Nio is still a buy, with or without a strategic partnership with Apple. If the buzz pops out, that would be the icing on the cake.
In reality, even if these rumors don't come true, if traders are currently buying these rumors, the stock will rise. Techniques also indicate that Nio is about to jump.
The price completed a declining flag, bullish after a fifth consecutive march and up 25% from the low of December 14 to the high of December 22, creating a & # 39; flagpole & # 39; of $ 10. That's now the implicit shift from the $ 46 breakout point of the flag to the $ 56 target.
While the breakout volume increased from that of the flag's support, it didn't really peak in an obvious way, like on December 2, let alone November 13. While flag breakouts have not always been accompanied by increasing volume, this moderate volume could have occurred as traders traversed a second tier of market forces, as the price reached the top of a symmetrical triangle.
We hope to see that volume spike again when bulls clear out all that available supply and the outbreak of the larger pattern attracts more traders.
You can see how the volume increased until the development of the triangle, but has decreased since then. Also note that in addition to the volume on November 13, the green daily volume almost always beats the red daily volume.
The ROC, a sensitive momentum-based indicator, has bottomed out. This provided a leading indicator that price will too. The implied target of the $ 56 completed flag no doubt says that the prize will also complete the triangle. close above $ 50 then complete a return move verifying the integrity of the cartridge.
Moderate traders would either wait for the triangle to break out or wait for a return movement to support the flag before going long.
Aggressive traders would buy at will, provided they had a plan that included entry and exit points and offered them a reasonable risk-reward ratio.
Here's an example.
Trade Sample
Entry: $ 47
Stop Loss: $ 46
Risk: $ 1
Target: $ 56
Reward: $ 9
Risk: Reward Ratio: 1: 9
