Tesla Smashes Through Bullish Pattern: What's Next For The Stock?

The global chip shortage continues to impact vehicle manufacturers. On Wednesday Tesla Inc TSLA CEO Elon Musk confirmed the new version of Tesla’s Roadster model will be delayed until 2023 as long as “2022 is not mega drama.”

The shortage is now a known event and the market has likely priced in the news although if the delay continues on well into next year the market may have to readjust how it values electric vehicle manufacturers. For now, news of more delays isn’t spooking investors and many EV companies, such as Nio Inc – ADR NIO have beat both revenue and delivery number estimates this year despite the difficulties in obtaining chips.

See Also: Nio Rival Xpeng Says It Could Beat Q2 Delivery Target Despite Chip Shortage Concerns

The Tesla Chart: On Aug. 30, Tesla’s stock broke up from a triangle pattern Benzinga called out on Aug. 26. The stock had been trading in the formation since April 14 when it entered into a month-long downtrend. On May 19 Tesla hit a bottom of $546.98 and reversed course, which created the bottom ascending trendline of the triangle.

Since the date, Tesla has been trading in an uptrend making fairly consistent higher highs and higher lows. On Aug. 20 when Tesla broke up from the triangle, it made a higher high above the Aug. 13 high of $729.90, which confirmed the uptrend was still intact. The most recent higher low is at the $648 level and when Tesla pulls back for its next round of consolidation, it will need to hold above the level.

Tesla is trading above the eight-day and 21-day exponential moving averages (EMA) with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is also trading above the 200-day simple moving average, which indicates overall sentiment in the stock is bullish.

• Bulls want to see increasing bullish volume come in and drive Tesla’s stock back up above a resistance level at $745. If Tesla can regain the area as support, it has room to move toward $780.
• Bears want to see big bearish volume come in and drop Tesla down the $720 level, which aligns with the eight-day EMA. If Tesla loses the levels as support it could fall back to retest the upper descending trendline of the triangle. If the stock were to fall through the triangle’s trendline, it could retest the $720 area as support.