What you need to know
- Tesla shares are little changed in the early hours of Tuesday morning after dropping 4% on Monday amid uncertainty about new California tax credits for electric vehicles and by UBS analysts’ bearish comments.
- The stock's recent bullish price momentum may have temporarily hit the skids after the shares initially climbed to their highest level in more than two years on Monday before undergoing an intraday reversal to close near the day’s low.
- Investors should watch key support levels on Tesla's chart around $310 and $265, while watching a bullish bars pattern price target near $500.
Tesla shares (TSLA), which fell 4% on Monday, were unchanged early Tuesday. Analysts at UBS had expressed a bearish outlook and questioned the new California Electric Vehicle (EV) Tax Credits.
Gavin Newsom of California said Monday that the State would offer EV tax credit if Trump’s administration eliminated them on the federal scale. Newsom did add that these rebates were meant to promote competition, innovation, and the development of zero emission vehicles.
Yesterday, the mood may also have been affected after UBS’s Joseph Spak stated in a note of research that recent stock gains post-election were driven by “animal spirits,” Rather than making fundamental changes to your company.
Tesla’s shares are up around 35% in the last few days. Investors believe that Elon Musk, the CEO, will be able to benefit from his close relationship with President-elect Trump, perhaps through a relaxation of self-driving regulation. Stocks were trading slightly higher at $339 during recent premarket trade Tuesday.
Below, we take a closer look at the technicals on Tesla's chart and identify important price levels worth watching out for.
Intraday Reversal
Tesla’s shares broke out of an ascending triangular pattern earlier this month, following Donald Trump’s victory in the election. They trended upwards for about a full week, before consolidating into a pennant chart pattern, which signals that Tesla’s stock will continue its current uptrend.
Tesla’s bullish momentum in recent months may have been temporarily halted after shares initially rose to the highest levels seen in over two years, before experiencing an intraday reverse to close at the low of the day. RSI turned down to create a similar head-and-shoulders pattern.
We’ll use technical analysis in order to find key levels of support on Tesla’s chart. Investors can then monitor these during a correction and project a bullish forecast price for the stock if it resumes its upward trend.
The Key Support Levels To Watch
First, you should keep an eye out for the $310 mark, which is a level on the chart that could see a spike in buying near the bottom of the pennant.
If the share price falls below this threshold, it could fall as low as $265. This area — around 22% below Monday’s closing price — would likely encounter significant support from the ascending triangle’s top trendline, a region that currently sits in close proximity to the rising 50-day moving average.
Monitor for Bullish Price Targets
Investors can forecast bullish targets by using a bar pattern. This is a charting technique which analyzes previous price bars in order to predict future movements.
This tool is used to reposition the price bars immediately preceding the pennant on the chart of Tesla. This tool projects the target price of $500 for the stock if the bullish move continues.
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According to the article, as of its date of publication, the author did not hold any of these securities.
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