Short-term
From technical analysis standpoint in a short term it is possible (and probable) that tesla formed a contracting triangle (which is simple corrective wave marked as ABCDE. A triangle always occurs in a position prior to the final actionary wave in the pattern of one larger degree and therefore one more upside move is expected. If we consider this correctional wave as a bull pennant, in that case when pennant is broken to the upside (not always but most probable in a bull run) we can expect rally size of the previous one (before a correctional wave occured. In this case that would be towards 550-600$.
If wave E has already finished and it is a complete triangle, only upside is expected, if not, it can go down to $400 levels before starting an impulse up. $400 levels at this point is major support and a trendline (as a green line) and if broken we can expect extended correction, but in my opinion it should bounce off if a trendline.
From support stand point and if we break to the downside, there are two major support levels at $330-360 and $260-280 which would be good entry points to consider, but honestly with all the buzz, innovation and quite heavy domination in electric vehicle industry, I highly doubt that we will reach those levels. Just in case we would, we should ladder our buys and never buy 100% in one go.
Medium term
If we take a closer look at weekly time frame, there are some signs of weakness of a major trend:
While price action show higher highs, weekly RSI shows lower highs which more often than not shows that trend might reverse soon.
Weekly and monthly RSI is in overbought area which could be an idication for a sell off.
MACD histogram is ticking down, moving avarages are nearing each other which might indicate a bearish divergence.
Tesla price action graph looks exponential and a correction of bigger degree might happen in a near future maybe after impulse. (it might not happen at all, but one should be cautious).
But for now as we all can happily agree, trend is our friend, so we should ride it.
Any thoughts?
From technical analysis standpoint in a short term it is possible (and probable) that tesla formed a contracting triangle (which is simple corrective wave marked as ABCDE. A triangle always occurs in a position prior to the final actionary wave in the pattern of one larger degree and therefore one more upside move is expected. If we consider this correctional wave as a bull pennant, in that case when pennant is broken to the upside (not always but most probable in a bull run) we can expect rally size of the previous one (before a correctional wave occured. In this case that would be towards 550-600$.
If wave E has already finished and it is a complete triangle, only upside is expected, if not, it can go down to $400 levels before starting an impulse up. $400 levels at this point is major support and a trendline (as a green line) and if broken we can expect extended correction, but in my opinion it should bounce off if a trendline.
From support stand point and if we break to the downside, there are two major support levels at $330-360 and $260-280 which would be good entry points to consider, but honestly with all the buzz, innovation and quite heavy domination in electric vehicle industry, I highly doubt that we will reach those levels. Just in case we would, we should ladder our buys and never buy 100% in one go.
Medium term
If we take a closer look at weekly time frame, there are some signs of weakness of a major trend:
While price action show higher highs, weekly RSI shows lower highs which more often than not shows that trend might reverse soon.
Weekly and monthly RSI is in overbought area which could be an idication for a sell off.
MACD histogram is ticking down, moving avarages are nearing each other which might indicate a bearish divergence.
Tesla price action graph looks exponential and a correction of bigger degree might happen in a near future maybe after impulse. (it might not happen at all, but one should be cautious).
But for now as we all can happily agree, trend is our friend, so we should ride it.
Any thoughts?