Benzinga - NIO, Inc (NYSE: NIO) was falling almost 2% lower in the premarket on Thursday, in sympathy with Tesla, which was looking to open lower following its first-quarter financial results.
The move lower comes after Nio dropped over 7% on Wednesday when Tesla announced another round of price cuts on its vehicles in the U.S.
Tesla printed earnings per share of 85 cents, which was in line with the Street estimate, and revenues of $23.33 billion, which beat the $23.21 billion consensus estimate.
Tesla has been slashing the prices of its EV models to increase demand, which some worry could start a price war, which could reduce profits across the industry.
From a technical analysis standpoint, Nio looks set to trade lower because its decline on Wednesday caused the stock to negate its uptrend. In order for a downtrend to confirm, however, the stock will need to bounce up to print a lower high.
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The Nio Chart: Nio formed a lower low on Thursday, which negated the downtrend. The stock also printed a bearish kicker candlestick, which indicated a gap down to lower prices was likely to come on Thursday.
- Nio also formed a head-and-shoulders pattern, which is bearish, and on Wednesday, the stock fell through the ascending neckline of the pattern. The measured move on a break of the formation is about 22%, which suggests Nio could fall toward about the $7 mark in the future.
- Bullish traders want to see Nio print a reversal candlestick, such as a doji or hammer candlestick, near the $8 mark if the stock continues to trend lower. If that happens, Nio will form a quadruple bottom pattern at that level, which would be bullish.
- Bearish traders want to see continued high-volume selling drop Nio under $8 or for the stock to bounce briefly to confirm a downtrend before beginning to fall again.
- Nio has resistance above at $9.48 and $11.38 and support below at $8.38 and $8.03.
Read Next: Why Tesla Stock Is Trading Lower Thursday
Photo: Nio
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