Technical Analyst, Saxo Bank
Summary: Tesla selling pressure has weakened. Share is testing falling trendline and could bounce to 150 before selling pressure and down trend is likely to resume. Medium-term bearish picture still intact
Tesla is testing upper falling trend. The bounce comes after a strong Friday close despite the company’s announcement of massive price cuts but was already indicated by RSI divergence i.e., the share price closed lower two weeks ago but RSI didn’t make a new low. Combined with declining volume i.e., easing selling pressure, there are indications of weakening of the trend and a correction could be seen.
A correction could take Tesla to 150 level – if it can close above the falling trendline.
If Tesla slides back to close below 113 there is great likelihood of new lows in Tesla.
The medium-term bearish outlook outlined in previous Technical Update is still valid.
Extract from the analysis you can read here https://www.home.saxo/content/articles/equities/technical-analysis-tesla-28122022 “RSI is currently below 40 i.e., in negative sentiment on all time periods indicating lower levels are likely both short- and medium term. Tesla dropping to 64 and possibly even lower in 2023 seems more and more likely.
In a Technical Update from November I explain why https://www.home.saxo/content/articles/equities/ta-tesla-bubble-imploding-22112022
Tesla is a bubble that is imploding and when that occurs the price can drop all the way down to the base. The base is the price area where a stock was trading before it took off. The base price area for Tesla is between 20 and 30. If Tesla drops below 64 next year that scenario could unfold.
Bottom fishing can be costly and one needs to keep it stops tight. However, there will be corrections when new money comes in to the market and sudden upward corrections of 5-10% could be seen. But as mentioned trend is down and selling is likely to resume pushing Tesla to above mentioned levels.”
Tesla needs to close above 199 to reverse the medium-term bearish picture.
RSI divergence: 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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