Don't Ignore This Chart!

Tesla Battles Key Moving Average as Momentum Improves

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Tesla was hit hard in early May, but the stock managed to reverse near the 50% retracement and a bullish wedge is taking shape near the 200-day simple moving average. The stock surged from 140 to 270 from mid February to early April. This was a 90% advance in less than three months. The stock was entitled to a correction and the decline to the 205 area retraced around 50%. This is normal for a correction and there are signs that the correction is ending.  


Some encouraging signs are emerging as the stock broke above 220 in mid May and challenged the 200-day SMA. A small wedge formed the last six days and this could mark a correction after the May bounce. Chartists can cue off the wedge trend line and the 200-day moving average for the next signal. A break above these would be bullish and argue for further gains. The indicator window shows MACD improving with a move above its signal line in May. Further strength into positive territory would be bullish for momentum.  

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--Arthur Hill CMT

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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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