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11/07/2021 |

$NIO Monthly Chart Case Study: Trend Zones, Seasonality, Raindrop Charts®, and Analyst Estimates

Using a mix of technical indicators as well as non-technical indicators can help with getting an edge in the markets. Using TrendSpider, we go over the different ways technical indicators such as Raindrop charts and non-technical indicators such as historical seasonality and analyst estimates can help get a full perspective on the markets and individual names.

$NIO Monthly Raindrop Chart

$NIO chart.

This is a monthly raindrop chart of NIO looking back since September of 2019. This case study focuses on using volume within candlesticks using the Raindrop charts, identifying “zones” of interest rather than just precise trendlines, looking at historical seasonality each month since the IPO, as well as the sentiment of analysts using the “analyst estimates” tool on TrendSpider.  
  1. This number shows trend zones for both the resistance and support areas that make up the symmetrical triangle on NIO. These zones pick up price action below resistance and above support to highlight more of an area acting as resistance or support rather than an exact price level. Prices will never respect a level to the penny, and if they do it is likely a coincidence. Using trend zones rather than trendlines allow you to have some flexibility around technical areas you are watching which can help with entries and exits.
  2. This number shows the most recent monthly candle which is in “Raindrop” form. A raindrop candle is a volume-based candle that measures the VWAP for the first and second half of a timeframe. In this case, the VWAPs for the first and second half of the month of October 2021.  The second layer of the raindrop is the volume profile painted onto the range of the candle showing where there was conviction on the demand side absorbing supply in the market. In this case, you can see the volume profile at the top of the candle during the second half of the month showing buyers absorbing any supply that was being dumped on the market. This is generally a bullish setup, especially at the apex of a symmetrical triangle.
  3. This number shows the historical seasonality for NIO since the IPO back in 2018. As you can see, there are only 3 years of data which is not a lot to go off. However, since the IPO, November has closed above the October monthly close 100% of the time. This strong seasonality and technical setup for NIO suggest November 2021 may be a strong month for the stock.
  4. This number shows the “analyst estimates” tool on TrendSpider which shows any analyst ratings that have come in over the last year. As you can see, the tool shows which institutions came out with the rating as well as how many buy, hold and sell ratings there are. As you can see for NIO, over the last year, there have been 10 “buy” ratings and zero “sell” ratings by analysts suggesting bullish sentiment on Wall Street for NIO. Using technical and non-technical tools, NIO seems to be in a prime spot for a move to the upside, but as always, traders and investors need to follow price action as it evolves to see the true direction.

We hope that this case study helps to show how striking a good balance between “clean” charting and a few useful indicators can help you to improve your overall trading performance by providing more insight into price direction and trend than price alone can offer. Why not try out some of these indicators along with the many others available on TrendSpider for 7-days free with this special offer.