How Tesla Stock Looks Following 3-1 Stock Split Approval, Cybertruck Update

Zinger Key Points
  • Tesla is trading in a fairly consistent uptrend on the daily chart.
  • The retracement to the downside is needed because the stock's RSI reached almost 75% on Thursday.

Tesla Inc TSLA was sliding more than 3% lower on Friday after attempting to regain the 200-day simple moving average as support but failing.

During Tesla’s annual shareholder meeting on Thursday, shareholders approved another stock split for the EV manufacturer, this time a three-for-one split which will increase Tesla’s outstanding share count to 4 billion.

Tesla’s last stock split was approved on Aug. 11, 2020 and began trading on a five-for-one split-adjusted basis on Aug. 31, 2020. Between those dates, Tesla skyrocketed 81.29% higher.

Tesla CEO Elon Musk also provided an update on the Cybertruck, saying the price would come in higher than originally anticipated when the vehicles are rolled out. The price increase, Musk said, is due to inflation.

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The Tesla Chart: Tesla reversed into a fairly consistent uptrend on June 16, making a series of higher highs and higher lows off the $620.57 level. The stock’s most recent higher low was formed on Aug. 2 at $878 and the most recent higher high was printed at the $940.82 level on Thursday.

  • On Friday, Tesla was retracing to the downside and may be looking to print another higher low above $879. Bullish traders would like to see Tesla test the eight-day exponential moving average as support and reverse to the upside off the level.
  • The retracement to the downside is needed because on Thursday, Tesla’s relative strength index (RSI) was measuring in at almost 75%. When a stock’s RSI reaches or exceeds the 70% level, it becomes overbought, which can be a sell signal for technical traders.
  • If Tesla closes Friday’s trading session near its low-of-day price, the stock will print a bearish kicker candlestick, which could indicate lower prices will come again on Monday. Bullish traders would prefer for Tesla to close the trading day with a lower wick, which could indicate the next higher low has printed and the stock will bounce up on Monday to continue in its uptrend.
  • Tesla has resistance above at $900.40 and $945 and support below at $877.95 and $821.

Photo: Courtesy Tesla Inc

Posted In: Long IdeasNewsShort IdeasTechnicalsStock SplitTrading IdeasCybertruckelectric vehiclesEVs