NIO Elliott Wave Analysis (15-03-21)

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Chances are, if you mention the Electric Vehicle (EV) industry, TESLA will be at the first EV stock that comes to mind.


But lo and behold, TESLA’s share price has already rocketed off way all the way to the “Red Planet”, way faster than SpaceX ever did, punt intended.


And if you are like me, constantly hot on the trails of similar EV stocks in the same industry.


Constantly scrutinizing similar EV stocks whose share price have not yet rocketed.


Then, you should also be familiar with other up and coming EV growth stocks like NIO, XPEV & LI.


Coincidentally, most of these hyper growth stocks have taken quite a beating in recent weeks.


Perhaps posing a potential buying opportunity if you believe the long term growth story of the EV industry despite not generating profits yet.






I have selected the NIO Inc as the basis of this week analysis although the charts for all 3 EV stocks are very similar in one way or another.





Looking at the overall NIO chart, we can more or less ascertain that the massive move up for NIO over the course of last year was probably due to the impulsive Wave ((III)) in orange.


And undoubtedly peaking at the end of the Wave ((III)) in Orange.


The 52 week high for NIO was at its ATH of $66.99.


Well, as the saying goes…what goes up must eventually come down.


Based on past statistical data, it was “Reasonable” to expect our NIO Elliott Wave Analysis to forecast either a Zig Zag or W-X-Y correction.


And with a high possibility of having “Equal” legs with at least  a 100% Fibonacci  Extension.


Possibly dropping at least into the Fibonacci Retracement of 50% to 61.8% reaction zone.






But the way this correction structure played out did caught me a little by surprise.


Frankly speaking, I wasn’t expecting a deeper W-X-Y “Double” corrective structure in White to unfold.


Judging from the recent hyperbolic growth of the EV sector spear headed by industry leaders TESLA.


I was quite convinced that this impending Wave ((IV)) correction in Orange would be a relatively “Muted” one given the strength of the EV industry.


But boy was I wrong.


The first leg of the W-X-Y correction in White was in itself a W-X-Y in Cyan in the lower degree.


Technically, the magnitude of this W-Leg of the larger W-X-Y corrective structure can be regarded as relatively “Small”.


With the initial drop barely reaching the Fibonacci Retracement zone of 23.6%.


Judging by the small first A-Leg, I was expecting the C-Leg extension to be around the Fibonacci Extension of around the 100% to a maximum of 161.8%.


That is where I placed a pending Buy Order right smack at the 100% Fibonacci Extension level with a Stop Loss Order just beyond the 161.8%. 






Unfortunately, things don’t always turn out as planned, especially in the highly volatile financial markets.


On hindsight, we can tell that the C-Leg actually made an extended A-B-C correction in Cyan in the lower degree.


Dropping all the way to Golden Fibonacci zone of within the 50% to 61.8% levels.






Again from a Fibonacci Confluence perspective, this is within both the Golden Fibonacci zone mentioned above as well as the 261.8% Fibonacci Extension of the larger W-X-Y correction in White.


For more “Aggressive” traders, this is may present itself as an excellent buying opportunity as prices seems be making a 5 wave impulsive move up in the lower degree.


While for more “Conservative” traders, you can probably wait for the first wave in the lower degree to complete and wait for the breakout of the impending 2nd wave corrective structure to start buying.


Always do your own due diligence before committing to any trade.


Trade Safe and never risk more than 1% to 2% of your account equity on any single trade.



For more potential trade setup suggestions on the US Stock Markets, check our Blog Posts On US Stocks.



Shorten your learning curve by downloading our complimentary Elliott Wave Cheat Sheets.



For more articles on the Elliott Wave Principle, check out our other posts in our  Elliott Wave Blog.



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