Don't Ignore This Chart!

Tesla Weakens But Chart Is On Cruise Control

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Tesla (TSLA) remains a crowd favorite as the stock's 2017 advance has been accompanied by extremely heavy volume.  I see major accumulation when I look at TSLA's chart.  But like every other stock, momentum can become an issue from time to time and TSLA appears to be battling momentum issues.  Here's the latest weekly chart after TSLA dropped 7.56% last week:

Back in June, TSLA's weekly RSI moved above 80 and that's, quite frankly, an unsustainable level.  Consolidation began at that point and I expect to see one of two things moving forward.  Either TSLA continues to consolidate in a potential bullish ascending triangle with upcoming price lows in the 340-350 area or the slowing momentum results in a drop back to test recent lows and price support from the 280-300 range.

In either case, I'd be a buyer of TSLA.  Obviously, the best reward to risk would be that 280-300 test, but I'm not sure we get there.

Happy trading!

Tom


 

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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