Technical Analyst, Saxo Bank
Summary: Tesla Motors has closed below key support. The relief rally since New Year seems to be over and the stock has established a bearish trend. Short-term downside potential to around 155 but lower levels should not be ruled out
Tesla closed Wednesday below key support at around 187.60 and yesterday below 100 daily Moving Average. The break of the support has come after a couple of testing.
RSI has been warning about divergence and uptrend exhaustion for some time but is still above 40 threshold i.e., positive sentiment.
However, the trend is down on Tesla and a drop to 154.75 is likely. 55 daily Moving Average currently around 163 will provide some support.
If Tesla drops to 154.75 sellers will likely try to close the gap down to 144.43. If they succeed and Tesla closes below 144.43 January trough around 101.81 is in play.
For this bearish picture to reverse and uptrend to resume a close above 200.50 is needed.
On Weekly chart Tesla was rejected at resistance at around 208.70. Bear trend seems to resume. Weekly RSI is still showing negative sentiment with no divergence indicating lower levels below December 2022 trough could be seen. To resume uptrend a close above 217.65 is needed. .
RSI divergence explained: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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