Why Tesla Stock Needs To See A Bounce

Tesla Inc. TSLA shares are trading lower after the company noted in its fourth-quarter earnings report that its factories have been running below capacity for several quarters due to supply chain issues that are likely to continue throughout 2022.

Tesla was down 8.74% at $855.47 Thursday afternoon. 

See Related: Why Tesla Shares Are Falling

Tesla Daily Chart Analysis

• Shares have fallen to support in what traders call a falling wedge pattern and look like they could see a break below support if the selling continues.
• 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) continues to trend lower as it has for the last few months and sits at 33. This shows that the stock is just above the border for the oversold area, and if it continues to trend lower it may enter this oversold region and see strong selling pressure.

What’s Next For Tesla?

Tesla is barely hanging on to support as well as the border of the oversold region. This shows that the stock has been seeing some bearish movement lately. Bearish traders are looking to see the price crack below the support line and for the RSI to fall below the 30 level for selling to continue.

Bullish traders are looking for a bounce off support and for the RSI to begin trending higher once again and to cross back above the middle line.