Technical Update - Tesla share price set to resume bear trend. Lithium prices rising. What it means to investors Technical Update - Tesla share price set to resume bear trend. Lithium prices rising. What it means to investors Technical Update - Tesla share price set to resume bear trend. Lithium prices rising. What it means to investors

Technical Update - Tesla share price set to resume bear trend. Lithium prices rising. What it means to investors

Equities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  Tesla seems to be failing in closing the bearish gap created after disappointing earnings in April. An attempt Friday was demolished by Sellers taking control forming a bearish candle on the chart.
Perhaps a contributing factor in sellers coming in is that Lithium prices, which are a main cost input for Tesla, are on the rise after collapsing earlier this year


Tesla formed a gap after Earnings release 20th April. That gap – a body gap after the body of the candles, we do not take into account the shadows of the candles i.e., high and low of the day  - must be closed for Tesla to have the potential to resume uptrend. That means Tesla needs to close above 179.10.

Friday buyers tried from the opening, but sellers took immediate control selling Tesla throughout the session resulting in a Bearish Engulfing candle and the gap to persist.
Indicators are painting a bearish picture for Tesla. The share price is currently below 55, 100 and 200 Moving Averages and RSI is still showing negative sentiment. RSI and needs to close above 60 threshold to reverse to positive sentiment. And Tesla seems to be rejected at the lower part of the Ichimoku Cloud (shaded are).

If Tesla closes below the short-term rising trendline support at 159.97 is likely to be tested. A close below 159.97 the April low at 152.37 is likely to be tested. Then the Run away gap from January is in play. If that gap is closed i.e., a close below 144.43 selling pressure is likely to intensify further.

Source: Saxo Group

Medium-term Tesla is in a down trend on the weekly chart. Not even being able to test upper falling trend line and RSI is negative suggesting Tesla is likely to trade lower in coming weeks and months.
To reverse this bearish scenario the gap from April must be close short-term i.e., a close above 179.10. To reverse the medium-term downtrend a close above 207.80 is needed.

Source: Saxo Group

A note from Peter Garnry, Head of Equity Strategy on Lithium prices:
The biggest cost input for Tesla is the Lithium price. The Lithium price has collapsed since New year which is most likely the main reason Tesla on several occasions has lowered the price on their cars.
But now Lithium prices seem to be rebounding and if rebounding further it will hurt Tesla earnings

Source: Bloomberg
Author is haven a short position in Tesla
Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.