Is Tesla (TSLA) Ready For Another Drop?
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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 1-month chart of Tesla (TSLA) below with the added notations:
Chart of TSLA provided by TradingView
After declining for the past several weeks, as well as months, TSLA appears to be consolidating within a bearish flag pattern (yellow). A bear flag price pattern implies a break lower, although it’s certainly not a guarantee. A fall below the flag support likely means a test of the lows.
The Tale of the Tape: TSLA appears to be consolidating within a bear flag. A break below the pattern’s support area should lead to lower prices, thus a short position could be considered.
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
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