The Path of Tesla Stock
Amidst the roaring performance of Meta Platforms, Inc. this week, Tesla Inc. (TSLA) stands as an outlier. After reaching its peak in July 2023, Tesla has treaded on a consistent downward path, now approaching a crucial “confluence of support” where multiple technical analyses converge on a specific level. The big question here is—can this be the turning point for Tesla?
Seeking Patterns in Historical Performance
Turning back the clock to the first half of 2023, Tesla displayed remarkable performance by nearly tripling in value in just over six months, outshining the S&P 500. However, the glory was short-lived as it mirrors a consistent downtrend post its July 2023 peak, marked by lower lows and lower highs.
Unlocking Support with Fibonacci Technique
Delving into the technical intricacies, applying the Fibonacci framework unravels interesting patterns. The 38.2% retracement level coincides with the initial swing low in August 2023, followed by the next downswing stalling around the 50% retracement level near the 200-day moving average. The most recent decline has pushed the price down to the 61.8% retracement level, hinting at oversold conditions.
Matching Price Momentum and Trend Gauge
Visualizing from the peak in July 2023 to subsequent highs in the later months, Tesla hovers around the lower boundary of the trend channel. Converging to this channel, a confluence is seen around $170, bolstering the stock’s current oversold state as it tests support generated from two different technical approaches.
Prospects of a Short-Term Bounce
As the stock braces for a potential counter-trend bounce, a confluence of resistance is foreseen around the $225-230 range. This cluster involves the 38.2% retracement, the upper edge of the trend channel, and the 50-day and 200-day moving averages. Although the current oversold conditions indicate an imminent short-term bounce, a break above the resistance is indispensable for a retest of the 2023 high to become a concrete possibility.
A Multifaceted Approach
Investors are reminded that the investment journey is beyond a singular indicator. It calls for a mosaic of techniques, intertwined with market history, to identify potential opportunities. The current technical indicators suggest that Tesla may be on the verge of a substantial counter-trend bounce.
RR#6, Dave
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David Keller, CMT Chief Market Strategist StockCharts.com
David Keller, CMT is Chief Market Strategist at StockCharts.com and President of Sierra Alpha Research LLC, where he helps investors make better decisions using behavioral finance and technical analysis. Dave is a CNBC Pro Contributor, and he recaps market activity and interviews leading experts on his show “The Final Bar” on StockCharts TV. Dave is a Past President of the CMT Association, a global nonprofit organization of technical analysts, and was formerly a Managing Director of Research at Fidelity Investments. David is a classically trained musician and student pilot, and resides in Duvall, WA with his wife and two children.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.
This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
