Boom! Tesla Confirms Bearish Candlestick Pattern — Is A Bull Trap Next?

Tesla, Inc TSLA saw whiplash price action in the premarket on Thursday after CPI data released by the U.S. Labor Department showed inflation ticked lower in December.

The S&P 500 opened 0.2% higher before running into sellers who knocked the market down under Wednesday’s closing price. When the market opened, Tesla reacted negatively, confirmed the bearish evening star pattern, which the stock printed on Wednesday.

Cathie Wood has continued to load up on Tesla through her ARK Investment Management ETF in January, adding 91,523 shares on Wednesday. Wood’s funds have purchased a total of 475,000 shares this year alone, only two weeks into the first month of 2023.

While Wood continues to be a fan of the electric vehicle giant, the stock market hasn’t been kind to Tesla, especially since its CEO Elon Musk’s Twitter acquisition closed.

Traders and investors are worried Musk’s attention is far too divided among his multiple companies and that his behavior indicates his priorities could be more focused on the social media company.

From a technical analysis perspective, Thursday’s price action is likely to determine whether Tesla’s uptrend will remain intact or if Wednesday’s price action created a bull trap.

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The Tesla Chart: Tesla confirmed a new uptrend Wednesday by printing a higher high after printing a higher low at the $114.92 mark on Tuesday. Bullish traders want to see Tesla remain above that level or the uptrend will be negated.

• If Tesla can hold above $115 and bounce up from that level, higher prices could come on Friday. If that happens, bullish traders want to see the stock pop up above $126.
• If Tesla drops under $114, bearish traders will want to see big bearish volume come in and push the stock under the $101 level over the coming days, which could put Tesla in danger of losing an important psychological support at $100.
• Along with the support and resistance levels, Tesla investors can watch to see what type of candle is printed Thursday. If the stock closes near the low-of-day, Tesla will print a bearish kicker candlestick and if the stock closes with a long lower wick, a hammer candlestick is likely to print.
• Tesla has resistance above at $123.80 and $134.70 and support below at $110.07 and $101.81.

Photo via Shutterstock.