What you need to know
- Tesla shares continued their extended post-election rally on Monday, rallying to a new record high after Wedbush boosted its price target on the EV maker's stock.
- After breaking from an ascending triangular pattern, the shares are trending sharply higher, but relative strength indicates extremely overbought condition, which may lead to short term profit taking.
- A bar chart analysis that extracts and overlays from the triangle top trendline the steep trend the stock experienced from mid-June to early July predicts an upward target of $510.
- Investors should monitor key support levels on Tesla's chart near $360, $300, and $265.
Tesla’s (TSLA) stock continued its extended rally after the election on Monday. It reached a new high record, as Wedbush increased its price target for the EV maker.
The investment firm increased its price target from $400 to $515 but stated that it could go as high at $650 before the end of this year. They argued that the incoming Trump government will help the legacy EV makers’ self-driving initiatives and AI (artificial intelligence) projects.
Tesla shares surged 85% by Monday’s end, a significant increase since the beginning of the year. The majority of this growth came following the election of November 5, on hopes that Elon’s close relationship with Donald Trump, the President-elect, would streamline Tesla’s approval procedures.
In regular hours on Monday, the stock rose 6% and in extended trading it added another 2%. It now trades at around $472.
We break down Tesla’s technicals and highlight key levels on the chart that investors should be looking at as the stock of the electric car maker continues to reach new heights.
Overbought Trend Continues to Grow in Bullish Market
Tesla shares continue to trend sharply upwards since breaking through an ascending triangular pattern earlier in the month. Increasing trading volumes are supporting this rally.
Although the relative strength (RSI) indicates a bullish trend, it also shows overbought levels, allowing for short-term profits to be taken by investors who are taking advantage of extended stock gains post-election.
Technical analysis can provide some insights into the direction of the current upward trend and help identify support levels during a pullback.
Chart Based Bullish Targets to Watch
Bars pattern analysis is a method that uses past trends to forecast future movements.
By applying this tool to Tesla’s chart, the sharp move in the stock from June into early July is extracted and then overlaid from the triangle’s ascending trendline. It projects a target price of around $510 where you can lock in your profits if this current trend continues to be strong.
The Key Support Levels Monitor
Investors can keep a watch on the $360 mark during retracements. This is a level where shares could find support when retesting the trendline at the summit of an ascending triangle.
The shares could fall as low as $300 if they close under this level. Investors might look at this area for potential buying opportunities near the July 2023 swing-high and adjacent 50-day Moving Average.
A significant correction of Tesla’s shares could lead to another test at the lower support level near $265. It is possible that this level will attract buyers in close proximity to a trendline which connects several peaks of the chart between October 2020 and October 2019.
The opinions and comments expressed by Investopedia on this site are solely for informational use. Read our warranty and liability disclaimer for more info.
According to the article, as of its date of publication, the author did not possess any of these securities.
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
