Tesla Stalls At Support And Could Turn Around: A Technical Look

Tesla Inc TSLA tested a key support level Thursday and held.

Despite two big weeks of tech earnings, the overall market has struggled and both the S&P 500 and the Nasdaq 100 have retreated from all-time highs amid fear of inflation.

On Thursday, it was reported demand is so high for Tesla’s cars it has already sold every vehicle that it will be able to produce during the second quarter. The company is struggling to meet demand due to its inability to make enough electric batteries.

Tesla’s production woes will, eventually, come to an end once it has completed building its vehicle factories in Austin, Texas and Berlin, Germany.

On Sunday reports emerged that the company said production at its Berlin factory has been delayed until at least the beginning of 2022, but Brandenburg Economic Minister Jörg Steinbach reportedly "believes Tesla is on pace for a late-Summer or early-Autumn start at Giga Berlin."

Tesla’s stock, while trending down over the past month, has formed a bullish descending channel and might be ready to bounce.

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The Tesla Chart: Tesla’s stock has been making a series of lower highs and lower lows since April 16 since filling an overhead gap it left behind on Feb. 22. Over the past four trading days, the stock has held the midline of its descending channel and on Thursday failed to break up above the upper sloping trendline of the channel.

The stock closed just above resistance at the $660 level, which Tesla has tested on six separate occasions over the past month and held.

Tesla is trading below both the eight-day and 21-day exponential moving averages (EMAs) and on Monday the eight-day EMA crossed below the 21-day EMA, both of which are bearish. Tesla’s stock is still trading above the 200-day simple moving average, however, which indicates an overall positive sentiment in its stock.

Bulls want to see bullish volume come into Tesla’s stock to help it break up through the descending channel. If Tesla is able to break bullish from the channel, it has room to move up towards $718 before bumping into another resistance level.

Bears want to see Tesla’s stock continue to trade down under the eight-day and 21-day EMAs and for it to lose support at $660.34. If Tesla is unable to hold the level as support, it could trade down towards the $596 area before finding another support level.

TSLA Price Action: Shares of Tesla were trading around $668 at the time of publication.