NIO Inc. is facing tough times, with its stock dropping more than 30% since November. This decline follows a head and shoulders pattern that started appearing in August 2025, signaling a target of $4.74, which was reached on December 3rd. Right now, the stock is moving sideways, suggesting a possible short-term rise towards $5.39. If it reaches this resistance level, it could change the current momentum. However, a bear flag pattern indicates a possible decline unless the stock convincingly breaks above $5.39. The support level is set at $4.28, based on an upward trend from April’s low points. If the stock drops to this level, it might bounce back to around $5.10. This could be a critical point for any future rallies in the stock’s movement. NIO’s stock has already hit its predicted downward target of $4.74 earlier this month. Since then, it has been trading in a narrow range, which offers a chance for traders in the coming weeks. The market is deciding whether this is the base for a recovery or just a pause before another decline. For those looking for a quick bounce, the key level to monitor is the $5.39 resistance. Recently, there has been an increase in call option volume set to expire in January 2026, indicating that some traders believe the stock will reclaim that level. This optimism is backed by NIO’s latest delivery report from early December, showing that 21,500 vehicles were delivered in November, slightly beating analysts’ expectations. However, this consolidation could also indicate a bear flag, which might lead to another drop if the $5.39 level acts as a ceiling. This bearish sentiment is supported by broader market worries, as the China Passenger Car Association recently predicted that EV sales growth in 2026 will slow to about 20% due to fierce price competition. Traders might consider selling call spreads just above $5.39 to take advantage of this potential resistance. The critical support level to watch is the major support at $4.28. If the stock breaks below recent lows, it could quickly drop to this trendline, which originates from the April 2025 lows. Traders might find this an ideal opportunity to buy short-term calls or sell cash-secured puts, expecting a bounce toward $5.10. Despite the significant 30% drop since November, implied volatility for NIO options remains high. This makes buying options somewhat pricey, so strategies like debit or credit spreads could provide a more controlled way to bet on either a rise above $5.39 or a fall toward $4.28. The higher premiums also give an opportunity for those willing to sell volatility if they believe the stock will stay within a range until early January.

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