ย
Contrary to prevailing buoyant market sentiments.
ย
Our blog’s NIO Elliott Wave Analysis has taken a diverging view to most main stream analyst’s opinions.
ย
Being a contrarian trader has always worked well for me in the past.
ย
Sometimes, being able to view the financial markets differently from most traders has its advantages.
ย
Somehow, it has allowed me to better understand how the Big Boys work behind the scenes to manipulate the markets.
ย
And often, the best trading outcomes has always been trades that are able to ride on the coattails of the Big Boys.
ย
ย
CURRENT NIO ELLIOTT WAVE ANALYSIS
ย
I reckon we can all agree that NIO is clearly in the midst of a major correction.
ย
Especially after its hyperbolic 5 wave move up to its peak at around $67 on the 11th Jan 2021.
ย
The big question on most trader’s mind is whether this correction has really ended?
ย
Statistically speaking, after a massive rally, prices will generally retrace.
ย
Typically, back to the Fibonacci zone of around 50% to 61.8% in a 3 wave corrective move.
ย
And ideally touching base with the Golden Fibonacci level of 61.8% for good measure.
ย
ย
POSSIBILITY OF BOY BOY’S INTERVENTION
ย
Technically, NIO has indeed retraced to just beyond the 50% retracement region.
ย
However, the manner in which the drop panned out can be a bit ambiguous to my liking.
ย
Our NIO Elliott Wave Analysis indicates that this massive drop from 11th Jan 2021 to 13th May 2021 looks more like a 5 wave impulsive sequence rather than a 3 wave corrective sequence.
ย
NIO’s current price action seems to hint that it has all the hallmarks of a possible Big Boy’s intervention.
ย
The next question that comes to mind is that what kind of corrective structure is it really forming if the Big Boys are indeed pulling the strings?
ย
ย
POSSIBLE SCENARIO
ย
According to the Elliott Wave Principle, there are a few different scenarios that could play out for NIO Inc.
ย
In my humble opinion, I am more inclined to go with the extended 5-3-5 A-B-Cย Zig Zag corrective structure.
ย
Kindly follow the Bright Yellow colored Dashed Zig Zag lines for visual reference.
ย
According to our NIO Elliott Wave Analysis, I view the A-Leg in White as a clear 5 wave sequence dropping to slightly beyond the 50% retracement zone.
ย
The ambiguity arises when we start analyzing the B-Leg in White.
ย
Here, I am viewing the middle leg as a more complex “B” wave corrective structure.
ย
Possibly forming a “Expanded Flat” corrective structure with an extended C-leg in the lower degree.
ย
And in the process, creating a “Bull Trap” to entice all the traders going long.
ย
ย
PLAUSIBLE OUTCOME
ย
Now, if the “Contrarian” view works out, our NIO Elliott Wave Analysis seems to indicate that the impending drop is likely to pan out as a 5 wave sequence.
ย
The C-Leg in White could jolly well drop much lower to retest the Fibonacci 61.8% to 78.6% zone as highlighted by the Green Box.
ย
Personally, I have “witness” similar moves by the Big Boys for hot technology stocks in the past.ย
ย
That is primarily why I am biased to the downside for NIO going forward.
ย
However, like I always preach, the markets are “Unpredictable”.
ย
Always do your own due diligence before committing to any trade.
ย
Trade Safe and never risk more than 1% to 2% of your account equity on any single trade.
ย
ย
For more potential trade setup suggestions on the US Stock Markets, check our Blog Posts On US Stocks.
ย
ย
Shorten your learning curve by downloading our complimentaryย Elliott Wave Cheat Sheets.
ย
ย
For more articles on the Elliott Wave Principle, check out our other posts in ourย ย Elliott Wave Blog.
ย
ย