Tesla correction looks complete around $635

Written by Finacademy.io

June 1, 2021

Technical Analysis:

Tesla might have completed its pullback rally or correction around $635 levels yesterday. Bears might be poised to resume lower from here and drop towards $380-400 mark in the near term. Potential remains for a decline towards $300/10 levels as seen on the chart here.

Tesla had earlier rallied from $37 lows through $900 levels; subdividing into 5 waves. After terminating the impulse rally, the tech stock had reversed lower and dropped through $539 levels on March 05, 2021. The drop was also an impulse wave.

It is labelled as Wave 1 of a potential larger degree impulse lower. Ideally, an impulse wave is followed by a corrective wave against the larger trend. Tesla had rallied through $780 levels in 3 waves, which was corrective as expected.

The stock had rallied up to fibonacci 0.618 retracement of the earlier drop between $900 and $539 levels respectively. The corrective wave was labelled as potential Wave 2 and what followed thereafter is Wave 3 in progress.

Tesla is progressing lower in Wave 3 and is expected to reach $400 and $300 levels in the next several weeks. Also note that $380 is the triangle termination or Wave 4 or one lesser degree as well. It is also a confirmation of potential trend reversal.

Any rallies from here through $700 levels could be considered as fresh opportunities to initiate fresh short positions in Tesla. Downside potential remains at least $400 levels from here.

Prepared by

Finacademy Technical Team

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