NIO Limited (NIO) shares rose more than 8% during Wednesday's session after Citi raised its price target from $33.20 to $46.40, citing significant tailwinds for the electric vehicle (EV) stock over the coming quarters.

Key Takeaways

  • NIO stock rose more than 8% during Wednesday's session after Citi raised its price target to $46.40, citing significant tailwinds for the EV maker.
  • Analyst Jeff Chung reiterated a positive view based on several factors, including a strong order backlog with high margin visibility.
  • The stock appears overbought from a technical standpoint, which means traders will be looking for some near-term consolidation.

Citi analyst Jeff Chung reiterated a positive view based on a strong order backlog with high margin visibility, strengthening gross processing margins, an increase in market share, battery cost reductions, and policy tailwinds related to exports. The move follows similar price increases across the EV sector, including an 11% gain for Lordstown Motor Corp. (RIDE) and a 5% gain for Li Auto Inc. (LI) during the session, as the results of the presidential election continue to come in.

Chart showing the share price performance of NIO Limited (NIO)
TradingView.com

From a technical standpoint, NIO stock reached fresh highs during Wednesday's session. The relative strength index (RSI) moved further into overbought territory with an 80.88 reading, but the moving average convergence divergence (MACD) continued its uptrend. These indicators suggest that the stock could see some consolidation before continuing its move higher.

Traders should watch for near-term consolidation between Fibonacci extension levels of $36.67 and $39.80 over the coming sessions. If the stock breaks down, traders could see a move to retest trendline support at around $28.00. If the stock breaks out higher, traders could see a move toward Fibonacci extension levels of $43.79.

Fibonacci numbers are used to create technical indicators using a mathematical sequence developed by the Italian mathematician, commonly referred to as "Fibonacci," in the 13th century.

The Bottom Line

NIO shares moved sharply higher during Wednesday's session after Citi raised its price target to $46.40, citing numerous significant tailwinds over the coming quarters. With the stock trading at overbought levels, traders could see some near-term consolidation over the coming sessions before the stock resumes its secular uptrend.

The author holds no position in the stock(s) mentioned except through passively managed index funds.