Tesla Shares Continue To Hold Strong In A Pattern: What's Next?

Tesla Inc. TSLA shares are trading higher Monday. The stock is trading in a bullish reversal pattern and looks to have recently bounced off the 200-day support level.

Piper Sandler maintained an Overweight rating on the stock and raised the price target to $1,350.

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Tesla was up 0.40% at $863.77 Monday afternoon at publication.

Tesla Daily Chart Analysis

• Shares trade in what technical traders call a falling wedge pattern. This bullish reversal pattern could be confirmed if the stock can cross above the pattern resistance and be able to hold above the level. Looking at volume one can see that the volume is falling, another possible sign the trend is ending.
• The stock trades below the 50-day moving average (green) but above the 200-day moving average (blue). This indicates the stock looks to be trading in a period of consolidation. The 50-day moving average may act as resistance while the 200-day moving average may be support.
• The Relative Strength Index (RSI) has been pushing sideways for the past few weeks and sits at 43. This shows the selling pressure is slightly stronger than the buying pressure. If the RSI can get back above the middle line the stock may start pushing higher once again.

What’s Next For Tesla?

As the stock continues to trade in the pattern it continues to be squeezed between the narrowing support and resistance levels. If the stock can have a period of strong volume as it crosses one of these levels, it may see a breakout. Bullish traders are looking for higher lows to begin to form and for a resistance break to happen. This may cause a long-term reversal with bulls then looking for the stock to cross above the 50-day moving average. Bearish traders are looking to see the stock continue to fall in the pattern and eventually break below the support level, possibly causing a strong bearish push.

Photo: Courtesy Tesla Inc.