Tesla Bulls And Bears Battle It Out: What's Next For The Stock?

Tesla, Inc TSLA bounced up more than 8% off its opening price on Thursday in tandem with the general markets, which saw the S&P 500 spike 1.56% of the open before giving back all of its gains.

The counter rally to the upside is typical and expected in a bear market because just as stocks never go up in a straight line, securities also never go down in a straight line.

Like the S&P 500, Tesla has experienced five straight trading days in a row with bearish red candlesticks, closing each of those days lower than the stock opened to start the trading session, making a bounce imminent.

During the bounce, which topped out at the $759.66 mark, Tesla was unable to gain bullish momentum even though the trading volume was higher-than-average. This indicates the bears are firmly in control although a larger bounce, at least to print a lower high, is likely to come.

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The Tesla Chart: Tesla has been trading in a fairly consistent downtrend since April 4, with the most recent lower high printed at the $955.50 level on May 4 and the most recent low formed on May 2 at $848.03. Thursday’s low-of-day may mark the next lower low within the pattern although Friday’s candlestick will need to print for verification.

Tesla may bounce higher over the coming days because the stock’s relative strength index (RSI) is measuring in at about 30%. When a stock’s RSI reaches or falls below that level it becomes oversold, which can be a buy signal for technical traders looking to play a bounce.
If Tesla closes the trading day flat or above the $700 level, the stock will print a doji candlestick or hammer candlestick, respectively, which could indicate the stock will trade higher on Friday. If the stock closes the trading session below that level, it will print a long upper wick, which could indicate lower prices will come.
At press time, Tesla’s trading volume had already surpassed its 10-day average, with over 30 million shares exchanging hands compared to 29.05. The higher-than-average volume indicates that there is a high level of interest in the stock, and combined with the volatile intraday trading, indicates a fierce battle is taking place between the bulls and the bears.
Tesla has resistance above at $745.63 and $780.79 and support below at $720.95 and $700.