Nio stock price set to surge as golden cross, cup & handle forms

Nio stock price has soared in the past few months, moving from a low of $4.35 in February to the current $6.38. This rally may continue as the stock formed the highly bullish cup-and-handle pattern, which often leads to more gains.

Nio stock technical analysis points to more upside 

The daily chart points to more Nio share price gains, potentially to last year's high of $8 in the near term.

It formed a double-bottom pattern at $4.36 and a neckline at $5.41. Most notably, the stock formed a cup-and-handle pattern whose upper side is at $5.80.

It completed the formation of the handle section recently, which explains why it has jumped to its highest level since November last year.

The stock has also formed a golden cross pattern, which happens when the 50-day and 200-day Exponential Moving Averages (EMA) cross each other. This golden cross formed on March 26 this year.

The Average Directional Index (ADX) has jumped to over 20, a sign that the bullish momentum is continuing. It has also jumped above the 38.2% Fibonacci Retracement level at $6.13.

Therefore, the stock will likely continue rising in the near term, with the next important target being last year's high of $8. Such a move will be a 34% increase from the current level.

On the other hand, a drop below the upper side of the cup at $5.80 will invalidate the bullish outlook and point to more gains this year.

Nio stock chart | Source: TradingView 

Nio’s business is thriving 

The ongoing Nio stock surge is happening as investors predict that the company’s growth and profitability will continue doing well over time.

Its most recent delivery numbers showed that more people are buying its vehicles. Its deliveries surged by 136% to 35,496 in March this year. This brought the quarterly deliveries to 83,465, a 98% annual increase.

These numbers are strong considering that other top companies in the industry, including popular names like Tesla and BYD, struggled during the quarter.

The deliveries numbers came a few weeks after the company published its fourth quarter financial results. Its results showed that the fourth quarter deliveries rose to 124,807, up sharply from 72,689 in the same period a year earlier.

This growth led to a sharp increase in revenues, which jumped by 75% to $4.9 billion, while the gross profit rose by 136% to $868 million.

The most important part of this report is that the company made its first net profit, which has remained elusive for years. Its net profit soared to $40 million, and the management believes that the trend will continue.

This profitability means that the company has turned the corner and is now focusing on profitable growth after spending many years on product development. In addition to its flagship Nio brand, the management also launched the ONVO and Firefly models.

The company is also seeking to expand its business in other countries, including Europe and South America. It recently launched its first store in South America, where demand for EVs is rising. The company is also aiming to take advantage of lower tariffs in Canada and grow its business there.