Tesla Flashes Warning Signals Following Elon Musk's Selling Spree

On Thursday, Tesla, Inc TSLA reached a milestone with 30,000 superchargers stationed worldwide, ahead of its plans to open the network to other brands of electric vehicles.

The $7.5 billion federal program for EV infrastructure, which is part of the $2 trillion infrastructure spending plan President Joe Biden is expected to sign into law soon, requires charging stations are open to vehicles from more than one automaker in order to gain access to the funds.

The news was not enough to erase the losses caused by Tesla CEO Elon Musk selling about $4.83 billion worth of stock after a majority of respondents on his Twitter poll, which Musk posted on Saturday, voted in favor of.

Tesla’s stock may need some time to consolidate the volatility caused by the event and on Friday it appeared traders and investors were indecisive of which way the stock may travel next.

See Also: Elon Musk Sells Nearly $5B Of Tesla Stock To Foot Tax Bill; Plan Set In Motion Months Before Twitter Poll

The Tesla Chart: On Friday morning, Tesla looked to be printing a doji candlestick on the daily chart directing on a support and resistance level at the $1.045 mark. A doji candlestick represents indecision in a stock but can also be an indication of slowing momentum, which can signal a trend change.

The stock may be beginning to trade in a downtrend because on Nov. 11 Tesla printed a lower high at the $1,104.97 level. Next, a lower low under the Nov. 10 low-of-day at $987.31 will be needed to confirm the trend.

Tesla could also be settling into a bear flag pattern on the daily chart, with the pole created between Nov. 5 and Nov. 10 and the flag between Wednesday and Friday. If Tesla is unable to negate the bear flag, by regaining support of the eight-day exponential moving average (EMA), the stock could fall a further 20% if the pattern is recognized. Traders can gauge whether the bear flag will play out by watching to see if high bearish volume comes in if Tesla falls below the parallel lines of the flag channel.

Although Tesla is trading below the eight-day EMA, it's holding support at the 21-day, with the eight-day EMA trending above the 21-day, which further indicates indecision. Tesla is trading above the 50-day simple moving average, which indicates longer-term sentiment is bullish.

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• Bulls want to see big bullish volume come in and push Tesla up above the eight-day EMA and above the lower high at $1.104, which would indicate the bear flag is invalid and an uptrend may begin. Above the level, the stock has resistance near $1.152 and at the all-time high of $1.243.49.
• Bears want to see big bearish volume come in and break Tesla down from the flag formation. The stock has support below at $900.40 and $877.95.
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