What you need to know
- Investors will focus on Tesla’s shares to begin the week, after two days in a row of declines. They are anticipating the fourth quarter deliveries report from the electric vehicle maker.
- Stock has been consolidating within a pennant chart pattern, which signals the continuation of current upward trend.
- The price of $615 is predicted by a measured move. This method calculates how many points the upward impulsive movement was in the previous pennant, and then adds this amount to the top trendline of the pattern.
- During pullbacks, investors should watch key support levels on Tesla's chart around $360 and $300.
Tesla shares (TSLA), which have been in the spotlight for the past two days, will continue to be the focus of investors this week. They are re-evaluating the extended rally that the stock has experienced since the election and looking ahead to its fourth quarter deliveries report.
Wall Street expects that the number of deliveries, expected to be announced on Thursday, will come in at around 510,000, representing a 10% increase from the previous quarter, and a improvement of 5% from one year ago.
Tesla shares have risen more than 70% since the presidential election on Nov. 5. This has been due to the expectation that Elon’s close ties with Donald Trump, and his increasing influence in Washington would benefit Tesla’s ambitions for autonomous driving.
Tesla shares fell nearly 7% during the two last trading sessions and ended Friday’s session at $431.66. It is now down nearly 7% since its all-time low of $488.54 on 18 December, the day after the Federal Reserve stated that interest rates would be reduced at a slower pace in 2025. As most car buyers are financing their purchases, high interest rates may affect vehicle sales.
We will examine the chart of Tesla in more detail and highlight important levels for price.
Pennant Pattern Takes Shape
Tesla’s shares have been trending sharply upwards for several weeks since breaking through an ascending triangular pattern in early December. However, they are now consolidating within a pennant chart pattern, which signals that the stock will continue to rise.
The relative strength index has fallen since mid-December when it peaked near the all-time-high (ATH). However, the index remains over 50 and indicates a healthy momentum in the price.
Applying technical analysis, let’s forecast a Tesla share price target and also identify some major support levels.
The Measured Price Move Target
Investors can forecast an upside target price if the continuation of a move is successful using the measure move technique. This method is also called the measuring principle.
In order to apply the tool on Tesla’s chart we need to calculate the point distance of the upward impulsive movement that preceded pennants and then add this amount to the top trendline. This time, adding $150 to $465 gives us a projected target price of $615. Investors may choose to take profits in this area.
The Major Support Levels To Watch
Tesla shares may initially find support near top trendline of ascending triangle if the trendline breaks below pennant’s lower trendline. The current level is just above 50-day upwards sloping moving average.
The $300 area can be retested if the price falls below this level. Investors can look for buying opportunities near this psychological round number, and also the prominent swing high of July 2023.
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The author of this article does not currently own any securities listed above.
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