Tesla Charges North, Pulls Cathie Wood-Led ARKK And 2X Leveraged TARK ETFs Higher: A Technical Analysis

Tesla, Inc TSLA was rising over 3% on Tuesday, breaking up from a bull flag pattern on the daily chart.

On Monday, Wells Fargo analyst Colin Langan maintained an Equal-Weight rating on the EV giant and lowered a price target slightly from $265 to $260. Morgan Stanley analyst Adam Jonas maintained an Overweight rating on the stock and a price target of $400.

Jonas sees smartphone and EV technology continuing to merge and believes Tesla investors should consider the implications of a blurring of the lines between the two market segments.

From a technical analysis perspective, Tesla not only broke up from a bull flag on Tuesday but confirmed the stock continues to trade within a strong uptrend.

With Tesla holding a 10.8% weighting in Cathie Wood-led Ark Innovation ETF ARKK, the fund was moving higher in tandem with the Elon Musk-led vehicle maker.

Traders looking for leveraged long exposure to ARKK may choose to play the AXS 2x Innovation ETF TARK.

TARK is an actively managed 2X leveraged ETF aiming to return 200% of the daily performance of ARKK and was shooting up over 6% on Tuesday.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

The Tesla Chart: Tesla’s bull flag pattern was formed between Sept. 27 and Monday, with the upward-sloping pole created over the first seven trading days of that timeframe and the flag printing between Thursday and Monday. On Tuesday, Tesla opened slightly lower before breaking up from the flag on higher-than-average volume on smaller timeframes, which suggests the pattern was recognized.

• The rise also confirmed Tesla’s uptrend remains intact with the formation of a higher high. The most recent higher low was formed on Friday at $250.65 and the previous higher high was printed at the $263.60 mark the day prior.
• If Tesla closes Tuesday’s trading session near its high-of-day, the stock will print a bullish Marubozu candlestick, which suggests the stock could trade higher again on Wednesday. If the EV-giant closes the session with a significant upper wick, a shooting star candlestick will print, which would indicate lower prices and consolidation could be on the horizon.
• If Tesla continues to trek north, the stock will eventually close an upper gap that exists between $280.93 and $289.52. If that happens, Tesla is likely to find resistance, at least temporarily, at the upper range of the gap.
• Tesla has resistance above at $271.71 and at $285.83 and support below at $254.98 and at $234.35.