Usman Salis
NIO Inc. (NYSE: NIO) just got a reality check from the market. What looked like a potential breakout quickly turned into a short seller's paradise as the stock crashed through support levels.
Short Sellers Strike Hard
The Chinese EV maker is now facing its toughest test in months, with technical signals flashing red and traders like Pax cashing in on the chaos.
The action around NIO has been brutal. After hitting resistance near $7.42, the stock didn't just pull back - it collapsed. We're talking about a swift drop below $7.05 with an intraday test around $6.98 that had shorts celebrating. One trader summed it up perfectly: "Shorts are not joking today - enjoying a small trade." The setup shows sell orders positioned at $7.42 and $6.89, creating a perfect storm for bears.
Key Levels That Matter
- Resistance barriers: $7.42 and $7.69 are where selling pressure kicks in hard
- Critical support: $6.89 is the line in the sand - break this and things get ugly fast
- Candlestick action: Long red candles with heavy volume confirm the bearish momentum isn't fading
Why Everyone's Betting Against NIO
The perfect storm hitting NIO comes from multiple angles. Chinese EV makers are getting squeezed by brutal competition and shrinking margins while macro headwinds from slowing consumer demand in China make growth stocks toxic. The failed breakout above $7.40 was the final trigger that brought the short sellers out in force.
The next few trading sessions will tell the story. If that $6.89 support level holds, we might see some consolidation or even a dead cat bounce. But if bears push through that floor, we're looking at a potential slide toward $6.50 or worse. For anyone still holding long positions, this is a test of patience - NIO needs to reclaim territory above $7.50-$7.70 to get bulls interested again. Until then, volatility is king and shorts are calling the shots.
Usman Salis
