Tesla Is Teetering, But A Technical Look At The Stock Paints Bullish Picture
Tesla Inc (NASDAQ:TSLA) bulls couldn’t have asked for better news from CEO Elon Musk than the news they got in a tweet over the weekend when Musk said production of the company’s highly-anticipated Model 3 vehicle is about two weeks ahead of schedule.
Unfortunately, that good news hasn’t translated to market gains, as Tesla shares have plummeted 8.2 percent so far this week. The selloff accelerated on Wednesday after Goldman Sachs predicted Tesla shares have 50 percent downside remaining from current levels.
Related Link: Musk: Tesla Model 3 Commercial Launch Ahead Of Schedule
But while Tesla stock is taking a beating this week, the move hasn’t done too much damage from a technical perspective so far. An 8 percent decline in a week may seem like a lot, but Tesla stock remains up 55.4 percent year-to-date as buyers have stepped up ahead of the Model 3 launch. Even after this week’s dive, Tesla remains above its first major support level at around $327. The $327 level served as resistance during a brief consolidation period in April and May.
Experienced traders know that resistance levels typically transition to support levels once the resistance is broken.
Below $327, the next major potential support level for Tesla is in the $290-$300 range. Tesla has a long history with this level dating back three years now. Tesla tried to break through the $290 level three different times over a more than two-year stretch and failed each time. However, once Tesla finally made it above $290 back in March, the $290-$300 range served as support in April and May.
After such a huge run-up year-to-date, Tesla bulls shoudn’t worry too much about traders taking profits ahead of the Model 3 rollout. However, they should keep an eye on $327 and on $290 because a breakdown below $290 could put Tesla back in its previous trading range between $290 and $180.
Joel Elconin contributed to this article.
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