Tesla faces strong resistance around $710/20 levels

Written by Finacademy.io

August 10, 2021

Technical Analysis:

Tesla again managed to push through $716 levels yesterday, to test its resistance close to $722. The tech stock seems to be close to terminating its lower degree wave c with wave (ii) around $710/22 resistance zone. High probability remains for a bearish turn from here.

Tesla had earlier dropped from $900 through $539 lows, clearly sub dividing into 5 waves labelled as Wave 1 on the 4H chart here. The subsequent rally also proved to be corrective a-b-c labelled as Wave 2 respectively. Also note that Wave 2 had reached fibonacci 0.618 retracement of Wave 1.

If the above is correct, Tesla might be unfolding Wave 3 lower since $780 highs and prices should ideally stay below that mark going forward. Looking into the wave counts since $780 mark, the tech stock might have carved lower degree waves (i) and (ii) around $540 and $722 levels until now.

If the above unfolds accordingly, bears might come back strong from here and drag prices below $400 levels as wave (iii) begins to unfold. High probability also remains for a drop below $300 mark, as Wave 3 terminates.

Alternately, Wave 2 is still unfolding as a triangle and that the sideways grind could continue for a few more days before Tesla turns lower again.

Prepared by

Finacademy Technical Team

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