Chart Wars: Volkswagen To Overtake Tesla By 2024? Here's A Look At Near-Term Direction

Zinger Key Points
  • Unlike Tesla, Volkswagen is trading in a confirmed downtrend.
  • Tesla is trading in a confirmed uptrend after breaking up from a falling channel pattern.

Tesla Inc TSLA was outpacing Volkswagen AG VWAGY on Friday, with the former trading up more than 4% higher at one point while the latter gapped down to start the session but was working to erase its losses.

A Bloomberg Intelligence forecast recently released estimated that Volkswagen could overtake Tesla by 2024 to become the top electric vehicle manufacturer. Although Volkswagen currently holds more of the EV market share than Tesla in Europe, the German-based automaker has a long way to go before surpassing Tesla in North America and China.

Tesla CEO Elon Musk, when asked about the report during the Qatar Economic Forum in Doha, dismissed the question, responding "I believe that forecast was from you."

In 2021, Tesla delivered nearly a million electric vehicles compared to Volkswagen, which sold 452,900 EVs. Volkswagen produces more vehicles overall, having sold a total of 8.6 million vehicles last year when its gasoline-powered vehicles are included.

Tesla and Volkswagen have been equally beaten down this year, with both stocks trading down about 36% from their Jan. 3, 2022, opening price.

From a technical standpoint, Tesla appears stronger than Volkswagen, at least in the near term, due to two bullish patterns that have developed on the chart.

It should be noted that events affecting the general markets, negative or positive reactions to earnings prints and news headlines can quickly invalidate patterns and breakouts. As the saying goes, "the trend is your friend until it isn't" and any trader in a position should have a clear stop set in place and manage their risk versus reward.

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The Tesla Chart: On June 21, Tesla broke up bullishly from a falling channel on the daily chart and closed that trading day up 9.35% higher. When a stock breaks up from a falling channel, it can indicate a larger reversal to the upside is in the cards and Tesla has since formed into an uptrend.

  • Tesla’s uptrend was confirmed on Thursday, when the stock printed a higher low at $685.91, which was above the previous low of $626.08 formed on June 16. The most recent was created on June 22 at the $740.50 mark and if Tesla surpasses that level on Friday or early next week, the uptrend will remain intact.
  • Tesla is trading above the eight-day and 21-day exponential moving averages (EMAs) but with the eight-day EMA trending below the 21-day. If Tesla can remain above the 21-day EMA for a few more trading sessions, the eight-day will cross above the 21-day, which would give bulls more confidence going forward.
  • Tesla has resistance above at $745.63 and $780.79 and support below at $720.95 and $700.
  • At least a larger bounce to the upside is likely to come over the next few days because Volkswagen’s relative strength index (RSI) is hovering at about 35%. When a stock’s RSI falls toward or below the 30% level it becomes oversold, which can be a buy signal for technical traders.
  • If Volkswagen is able to close Friday’s trading session near its high-of-day price, the stock will print a bullish engulfing candlestick, which could indicate the larger bounce and higher prices will come on Monday.
  • Volkswagen has resistance above at $19.80 and $20.88 and support below at $18.56 and $17.42.

Photos: Courtesy Volkswagen and Tesla

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