How Far Will Tesla’s (TSLA) Stock Fall?
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Tesla, Inc. engages in the design, development, manufacture, and sale of fully electric vehicles and energy generation and storage systems. It also provides vehicle service centers, Supercharger stations, and self-driving capability. The company operates through the following segments: Automotive and Energy Generation and Storage.
Take a look at the 3-month chart of Tesla (TSLA) below with the added notations:
Chart of TSLA provided by TradingView
Over the past several weeks, TSLA has created a both a trendline of resistance and a trendline of support, lines that are diverging from one another. Combined, they have the stock trading within a chart pattern known as a broadening formation, which is a pattern that implies a rally could be getting close for TSLA.
The Tale of the Tape: TSLA has formed a broadening pattern. The stock seems to have further to fall, but that fall may lead to a meaningful recovery as well. A long position could be considered at that time.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key…
Good luck!
Christian Tharp, CMT