Send me real-time posts from this site at my email
Fan Yang

Tesla (TSLA) Retreating Back to Consolidation Range Support Again

Tesla has been trading sideways since 2017 between a support just above $240 and a resistance around $390. The daily chart shows that price has been declining since late 2018 after a failure to reach that $390 resistance. Price is trading under $280 now, and approaching a rising trendline support, as well as the range support just below that rising trendline. 

TSLA Weekly Chart

(click to enlarge)

Bullish Long-term Structure:
- While price has been essentially sideways since 2017, the overall price structure in the long-run has been bullish so far. 
- Price is still above the rising trendline and mostly above the 200-week simple moving average (SMA). 
- Furthermore, the RSI holding above 40 for the most part reflects a market that is trying to maintain that prevailing long-term bullish momentum.
- Soon, Tesla will likely test these conditions as price falls towards the $240-$250 support area. 
Bearish Scenario:
- Because this $240-$250 area has become a critical support, a break below $240 could open up a swift bearish swing towards $200, or even the next key support around $178.
Support Respect Scenario - Trade Plan:
- On the other hand, we might simply see a continuation of the sideways market since 2017. 
- I am considering a short-term trade here. Let's say I can average in an entry price around $250 with a stop at $230. 
- A conservative target of $300 gives me a 2.5:1 reward to risk ratio.
- I think the middle of the range around $320 is a viable target, which improves the reward to risk.
- The targets in the resistance area of $360-$390 would be a bit risky. If price does rebound to $300-$320, I would likely take profit and leave only a portion of the position as a runner towards this aggressive target range.
- Meanwhile, I would have a trailing stop so even this small position will lock in profit. 

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue