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Tesla (TSLA) at a key technical juncture

Bullish Reversal Swing: After entering the year bearish, TSLA found support just above 140. It then gained almost 100% in under 2 months, to 269. This swing broke above a projected falling resistance, and suggests a bullish reversal.

TSLA Daily Chart 7/11

(click to enlarge)

Fibonacci Retracement: The V-shape reversal swing stalled at 269 (but we saw a more common resistance around 260). We saw a bearish correction that came down to 190, around the 61.8% Fibonacci retracement level. The fact that the market supported TSLA here and pushed it back above 200 suggests bulls are now in charge. 

Consolidation Resistance: The bounce from 61.8% retracement pushed TSLA to the projected falling resistance seen in the daily chart.

Bullish Breakout Scenario: A break above this resistance could open up a bullish continuation scenario first towards the 269 high, with the 291.50, 2014-high in sight as well. Note that this is also the all-time high for TSLA.

Fundamentals: Tesla has been struggling with publicity recently. We know it has been struggling with deliveries. More recently, we also saw an auto-piloted Model X get in a fatal accident. It's acquisition of SolarCity has been questioned. But Elon Musk is still creating some excitement for Tesla. He tweeted that he was working on a 2nd Master Plan and would reveal it this week. The 1st master plan was revealed in 2006, and it essentially said this:

  • Build sports car
  • Use that money to build an affordable car
  • Use that money to build an even more affordable car
  • While doing above, also provide zero emission electric power generation options


Limited Bullish Outlook: I think the fundamentals are still shaky, and whatever bullish momentum it has in the short-term will be limited. Therefore, I think the bullish outlook should first be limited to 260, with 290 being the most aggressive target. Essentially, we should take profit around 260, and only leave a very small portion if we want to take some more risk with 290 as the target.