The share price of luxury electric vehicle manufacturer Lucid (NASDAQ: LCID) is aiming to build on recent gains and solidify its price above the $2 support, as the stock’s technical setup suggests what to expect.
At the close of the last trading session, LCID was valued at $2.17, ending the day up 1.64%. This builds on the bullish momentum witnessed on the weekly chart, where the EV’s stock has gained 4.3%.
Overall, this short-term momentum has done little to change Lucid’s fortunes in 2024, where the equity is down over 47% year-to-date.
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Following the recent momentum, LCID’s technicals suggest that the stock is trading at extreme oversold levels, hovering near a key high-volume node, a setup that presents a favorable risk-to-reward ratio, according to an analysis from the trading analysis platform Saral Trader in an X post on November 28.
According to the analysis, the stock has been in a downtrend since August, marked by lower highs and lows, culminating in a recent bottom below $2.
Since then, the stock has rebounded modestly, nearing resistance at $2.72. Key technical indicators, including rising trading volumes and the stock’s proximity to a support zone, suggest a potential reversal.
If this setup plays out, Lucid could see a 20-30% upward move, targeting levels near $2.80 to $3.00.
In this case, an oversold stock like Lucid signals a sharp drop, potentially setting up a rebound as selling slows and buyers step in. However, confirmation of a reversal is key, as oversold conditions can persist if fundamentals remain weak.
Why Lucid stock is rallying
It’s worth noting that LCID exhibited a sudden rebound when the stock faced bearish sentiment, with the chart forming the dreaded death cross at some point.
Questions about the rally’s stickiness persist at a time when the equity has received negative sentiments, such as BlackRock’s (NYSE: BLK) offloading of shares in the company.
Although the actual driver for the rally cannot be pinpointed, it can be attributed to comments by CEO Peter Rawlinson. While his dismissal of low-cost Lucid EVs, citing the mass market as “sucking,” may have disappointed some, Rawlinson’s optimism about the company’s technological advancements provided reassurance.
He emphasized that Lucid’s innovations could be crucial in achieving the broader goal of $20,000 in electric vehicles, potentially sparking investor confidence in the company’s long-term vision.
Analysts’ outlook for Lucid stock
Several analysts have issued varied ratings for Lucid. As reported by Finbold, BofA Securities lowered its price target for Lucid from $3.40 to $2.80 on November 21, maintaining a neutral rating due to market pressures and growth challenges.
RBC Capital Markets took a bearish stance on November 19, cutting its target from $3.00 to $2.00. It kept a “sector perform” rating, indicating limited upside potential.
Royal Bank of Canada lowered its target price from $3.00 to $2.00 on November 19, maintaining a “sector perform” rating. Conversely, on November 11, R. F. Lafferty upgraded the stock to a “buy” rating with an ambitious $4.00 target price.
In early October, Robert W. Baird and Cantor Fitzgerald issued “neutral” ratings with price targets of $3.00 and $4.00, respectively. Needham & Company reaffirmed its “hold” rating on November 8.
Despite the outlook, Lucid continues to navigate an environment of uncertainties in the EV sector, with concerns about execution, competition, and market sentiment. For a recovery, Lucid will need to deliver strong results and maintain investor confidence in the coming quarters.
Featured image via Shutterstock
