Tesla is Looking Slightly Bearish
The price action for TSLA has been appearing more and more bearish over the past several months. The bearishness started a few days before Tesla's last earnings call, where Elon Musk himself said that the end of the year was going to be rough for the company. He also said that if there was a dip, then he would buy the dip.
Was this an omen straight from the mouth of the founder and CEO of Tesla? With that being said, and with Tesla's earnings right around the corner, it is interesting to see this strong selling in this companies stock. Troubling macroeconomic conditions have likely added to the uncertainty and bearis sentiment. So when is it time to buy this dip that Elon mentioned?
Before I move on to the current technical picture, let's check out my last post on TSLA.
In my previous post, I mapped out the possible new trend for Tesla after its previous trend was unconfirmed. The trend seems to be working well as the price action has rebounded off of the mid bar within the new price channel and, more recently, rejected the resistance at the top of this new channel.
The price of Tesla's shares also reacted almost perfectly near the Fibonacci level and the minor support that I pointed out in my previous post. The price action fell further as I predicted. This is followed by a rebound near the 233.50 support line. Then, the price climbed to the upper Fib resistance level and then reversed to the downside.
All of these price moves near these horizontal support/resistance levels almost perfectly corresponded with the price moves off of the support/resistance lines of the new downward sloping price channel mentioned above. Now, let's check out the current technical picture for TSLA.
Consecutive Lower Lows
Since mid-July, TSLA has been on a downtrend. The price action has made a couple of lower lows since the 52-week highs that were made earlier this year. The lower lows coincide with a clear straight trend line that has acted as a strong resistance level soGary.
Last week, the price actoin of Tesla experienced another rejection at this dynamic resistance level, and it finished the week at a low point. After this rejection, the medium-term picture looks more and more bearish, as you can see in the chart below.
Very Long-Term Resistance
The recent selling pressure in the medium-term is coinciding with a very long-term resistance level. The 52-week high printed just below this trend line. You can see this in the chart below.
I have also highlighted the long-term support level by a purple line. Technically speaking, the long-term trend is still a strong uptrend indicated by that steep upward support line.
A dip below this support line might warrant a short position for a short-term swing trade. Based on how TSLA finished the week last week, it looks like there might be a little more downside in the very near future.
If there is more substantial downside, then I will be watching the major support level that I have highlighted in the chart below. It resides at the 242.50 price. This price point has acted as strong support and resistance in the past near previous highs and lows. Perhaps the price action may find support there once more.
Oscillators Could Flip to Bearish Territory Very Soon
The chart below has a few oscillating indicators that I find useful. They are all about to flip into a bearish tone. The fast and slow oscillators in KDJ and RSI respectively are about to drop below the 50 value. This is common when a slight downtrend occurs.
Also, MACD is about to print both a bearish cross and a death cross as it is just above its histogram. Often, you will see MACD drop below the histogram during a downtrend.
Potential Head and Shoulders Pattern
Another troubling technical development is the fact that TSLA has produced a lower low and a lower high on the 4-hour charts. It almost looks like there is somewhat of a lopsided head and shoulders pattern that could possibly get confirmed soon. The neckline of this head and shoulders resides near the 242.25 price point. I will be watching for a potential rebound or breakdown near this closest major support level.
Fibonacci Support
Whichever direction that the price chooses to go, I will be watching the horizontal support levels I have highlighted in the chart below. These are the levels I believe have the highest potential for reversals/rebounds and breakouts/breakdowns.
The Fibonacci levels highlighted with white lines are the strongest support/resistance levels I use in my trading. If the price falls to the 219.00 Fib level, then I will strongly consider a long position for a swing trade. I have also marked the major and minor levels to watch for potential swing or daytrade opportunities and a possible rebound to the upside. These are highlighted by the orange and yellow lines.
Another technical feature I've highlighted is somewhat of a zone of Fibonacci support/resistance levels. These areas are where longer-term fib levels are coellescing with the more near-term Fib levels. I am treating these areas as the strongest local support and resistance levels that I will be trading. If there is substantial downside below the 242.25 price mentioned earlier, then the 213.00 - 221.25 is the main area I will be watching for a potential rebound.
Price falling below this zone would coincide with a breakdown of the long-term support I mentioned earlier. This would make the long-term chart structure look a bit weaker. There would still be a long-term upternd in the charts, but it would make the mid-term technicals appear much more bearish.
Conclusion
The price action of TSLA appears like it has a little more room for some additional downside. If TSLA does not start the week off very strong, then I believe we will see more downside, at least in the very near term. I will likely be looking for a short opportunity to trade some puts throughout the week.
I should mention that I am very bullish in this company when I am talking about a very long-term time frame. But right now, in the short term, things are looking a bit bearish in Tesla's price action. I am a swing trader, so a change in any trend will be noted and likely traded.
I did want to point out an interesting side point. Tesla's capital flows have been strongly negative for 20 months in a row. The strongest outflows have occurred more recently in the latter half of these past 20 months, while TSLA has been in a very strong rally. Can anybody make sense of this for me in the comments section?
How do you think Tesla will finish the week next week? Green, Red, or Flat?
As always, I am not a financial professional, and this is not investment advice. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Give your investments time. Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. Do your own due diligence. And just follow the trends. A trend is your friend. Good luck trading.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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MonkeyGee : TSLA is not looking good !
Cow Moo-ney : Very comprehensive analysis
Silverbat : Probably slight green around 260, and higher next week. Lower Q3 GM seems has been priced in
SpyderCallOP : I had to update the post to include the validity of my previous TSLA post. A re-read is recommended.
ZnWC Silverbat: Tesla Q3 2023 earnings preview: what to expect and what the indicators say
As for the analyst recommendations, the consensus appears similar to the previous quarter. There are six 'Strong Buy', 12 'Buy', a larger group of 20 'Hold', three 'Sell', and four 'Strong Sell', resulting in a slight net buy bias, which isn't as strong as the industry average. Moreover, the current share price exceeds the average price target of USD 238.79 (source: Refinitiv).
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SpyderCallOP ZnWC: I still don't know how to trade this today. the market is looking bullish af. Might not short it today. Might even go long.
SpyderCallOP ZnWC: Nice preview, by the way
We need to see more of these