- Summary:
- Tesla stock price opened steeply lower on the day, but a strong bounce has enabled it to track back upwards and into a range, thus avoiding the bear market.
The pair is now threatening to break out from the descending channel as the day’s candle tests the 0.91533 resistance (18 August high). A break above this level confirms the channel break and puts the pair on the path towards 0.92264, with 5/12 March lows at 0.93126 forming an additional feasible target to the upside. 0.94004 is also a possible barrier to further upside moves on the pair.
On the flip side, a rejection at 0,91533 could initiate a pullback move that retests the 0.90479 price support. A breakdown of 0.90479 brings in 0.89953 as a likely downside target. Further strengthening of the Swissy beyond this point brings in 0.89144 as an additional target to the south. This effectively breaks down the channel, but questions may then arise as to whether the SNB will allow the USDCHF pair to head all the way down there without some form of intervention occurring, now that the SNB Chair has flown the kite.
Is Tesla Heading Into A Bearish Market Season?
The Tesla share price is extending losses for the 4th straight day as tech stocks on the Nasdaq 100 continue to face a rout. The Tesla share price started at $457.12 for the week following last Friday’s stock split, and the company started the week with a strong 12.57% gain. These gains have all been lost as investors have sold off the stock in the worst week of selling since June 2020.
Tesla is yet to experience a consecutive 3-day decline since March 18, when it ended lower for 5 days straight. That record is on its way to being challenged, as a lower close today would close off a 4-day losing streak. The stock opened 22% lower than the closing price of Monday, which would have met the definition of a bear market if price action had closed at this level or lower. However, the strong bounce has ensured that Tesla is just 9% lower on the week. However, the weekly setup shows price action forming a bearish engulfing candle, which could indicate a medium-term drop in the stock price of Tesla.
Technical Outlook for Tesla
Tesla’s slump this week came on the back of two facts. First, the ascent of the stock was very rapid and quite steep, which according to technical analysis, typically ends in a selloff. Secondly, the stock showed bearish divergence from the RSI on the daily chart. This divergence could only be corrected by a downside move on the stock.
Today’s drop found support at 368.52, which is the low of price seen on 19 August. A strong bounce has turned the candle into a doji candle as buyers and sellers tussle for direction. Further downside to the stock will require a breakdown of 368.52, which opens the pathway towards 305.57 (previous cluster of highs from 28 July to 7 August). The lows of 24 July and 11 August form an additional support at 274.10.
On the flip side, recovery on the pair depends on a break of 430.64 (highs of 26 August, 3 September and 4 September). This move would enable targeting of 457.12 and 502.49 (post-stock split high). Only a break of 502.49 re-establishes the uptrend.
Tesla Price Chart (daily)
