Usman Salis
⬤ NIO is sitting at a make-or-break point right now, holding around the $5 mark on the monthly chart. After spending what felt like forever stuck below its 20-month moving average, the stock finally pushed through and is now coming back to test that same level from above. What once kept the price down during years of decline is now potentially acting as a floor. As one analyst noted, "the current pullback represents a clean back-test of this level, occurring alongside steadily declining volume" - a sign that sellers might be losing steam.
⬤ The bigger picture shows why this moment matters. NIO went through a brutal downtrend after its peak, repeatedly bouncing off that 20-month moving average like it was hitting a ceiling. But something's changed. That same average is now acting as support instead of resistance. The price is clustering around this zone, suggesting the stock might be finding its footing rather than preparing for another leg down.
⬤ What's happening with volume tells an interesting story. Trading activity has noticeably lightened during this pullback compared to the heavy volume we saw during previous selloffs. Less volume during a decline usually means less panic - fewer people rushing for the exits. The Bollinger Bands have also squeezed tighter, showing volatility is dropping as the price consolidates near that 20-month average. This compression often happens right before a bigger move in either direction.
⬤ Long-term moving averages like the 20-month SMA tend to mark important turning points in a stock's journey. If NIO can hold above this level, it would suggest the relentless selling pressure that's weighed on the stock for years might finally be easing. But if it breaks below, we could be looking at renewed downside risk. Right now, NIO is balanced on that edge, and how this test plays out could shape investor sentiment and the stock's direction for months to come.
Usman Salis
