Tesla share price action is showing some signs of recovery after Tuesday’s massive drop. Tesla share price fell on Tuesday despite the shot-in-the-arm rate cut by the Fed, which did little to assuage the market.
Tesla share price achieved an all-time high of 968.85 on February 4, but concerns around coronavirus exerted a systemic effect which caused the price to pullback. However, Tesla’s shares have picked up once more as its production goes back into full swing. Its new Chinese plant is also producing; one of the few factories that are still online despite the coronavirus shutdowns. Consequently, Tesla seems a bit insulated from the crisis for now, as it has also raised its earnings and deliveries guidance for 2020 to well over 500K units.
So what does the Tesla share price activity for the day tell investors?
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Trying to look for a dip-buying opportunity at these times is a risky proposition. There are many coronavirus-related headlines, and these all can induce wild swings in price. Therefore, traders should be cautious with their entries and exits.
Presently, the daily and hourly charts for Tesla show a lot of price gaps. Using a line chart shows the closing prices for each day and smooths out the information for traders to use. We can see that the bearish Gartley pattern provided a technical basis for a selloff last week on the negative coronavirus headlines. This pullback has found support somewhere around a previous low at 743.63. A breakdown of this support has to come from a 3% penetration close below the support by the daily candle. This move could open the door for a price retreat to 698.43 (38.2% Fibonacci retracement from swing low of December 5, 2019 to February 4 2020). Further support lies at 647.36 and 627.74 (50% Fibonacci retracement).
If Tesla share price can build momentum from its factory activity and positive projections on deliveries and factory output, we may see a price recovery bounce that targets 785.90 (23.6% Fibonacci retracement and February 11, 2020 high).