The Tesla share price chart on the daily time frame reveals that the stock’s upside moves have stalled after the company announced that it was going to cut the wages of all salaried workers amid the coronavirus pandemic.
The wage cuts would see senior workers get a 30% cut, while directors and other salaried staff would see 20% and 10% wage cuts respectively. Tesla also announced that it would furlough thousands of other personnel who are on hourly wages until at least May 2020, when it expects to reopen some of its US plants for business. Non-US workers would also see reductions in salaries.
Despite record vehicle sales in March 2020, Tesla has closed many of its production facilities after the coronavirus pandemic swept through China and the United States.
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Tesla share price, which had rallied the previous week on the record vehicle sales numbers, stalled at the current resistance level of 574.44 (61.8% Fibonacci retracement from the swing low of December 5, 2019, to the swing high of February 4, 2020) as investors tried to make sense of the wage cut announcement. Tesla share price is also forming a “W” harmonic pattern, with price now in the CD wave phase. Further daily price action will show whether point D will develop at the current price levels, at the 50% Fibonacci price level of 650.51 (highs of Jan 30/31) or will track upwards to form at the 743.63 price level (38.2% Fibonacci retracement).
If point D forms at the current resistance, this would be a bearish Gartley pattern and we would expect the pattern to resolve with a bearish reversal, which targets 513.10 (March 24 and April 3 highs) and possibly 466.14 (78.6% Fibonacci retracement level). These are medium-term moves and price may find short-term pitstops along the way.
If point D forms at the 743.63 price level, this is a bearish butterfly “W” pattern variant. In this case, price reversal from point D would target the previously mentioned support levels in sequence, but would also have to take on support levels at 650.51 and 599.38 (January 22 and March 12 2020 highs).
On the flip side, advance beyond 743.63 would invalidate the pattern and would open the door towards 784.76 (Feb 3/11 highs), and possibly 820.69 (February 10 high and 23.6% Fibonacci retracement).