Nikola Corporation is overbought but there is room for more upsurge. When to buy?

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Nikola Corporation’s (NASDAQ:NKLA) stock is extremely bullish. The stock jumped from a support area of $9.17 on March 24 and has since maintained the gains. At the current trading of $11.14, the stock has added more than 21% in just five days.

The gains happened after the company announced that it started the manufacturing of the much-anticipated electric trucks. The stock jumped more than 16% on the day of the announcement. With Nikola already lagging its peers, such as Tesla in the EV sector, the news was interpreted as a company’s move to deliver on its promise.

Yet again, on March 29, Nikola entered into a financing deal with Mitsubishi’s ENGS Commercial for EV sales. The stock added more than 7% on the same day, continuing with the uptrend.

Nikola aims for $14 but could face a resistance between $11-$12

Source -TradingView

From the technical outlook, the established resistance of NKLA is at $14.65. We are optimistic the stock will rise to this level given the fundamental developments of the company.

Nonetheless, the stock is approaching a minor resistance zone of between $11 and $12, and a potential retreat will occur. The RSI reading of 73 also shows that investors have overbought the stock, and a correction can occur.

Concluding thoughts

Nikola is a strong buy based on the strong fundamentals and bullish sentiment. However, the stock could retreat after touching the minor resistance zone of $11 to $12.

Investors should look to buy on a correction to a lower price. The stock could rise up to a high of $14.65, which we believe would be the appropriate target in the medium term.

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