Tesla hits resistance at $690; ready to resume lower

Technical Analysis:

Tesla rallies through $690 mark and potentially completes its counter trend rally that had begun since $540 lows earlier. This probability was discussed over the last week and bulls have manage to extend its corrective rally now. The tech stock might be preparing to reverse lower.

Tesla is facing a number of resistances converging around $690 levels at the moment. First, the counter trend rally hits fibonacci 0.618 retracement of its recent drop between $780 and $540 levels respectively.

Second, the counter trend rally also hits fibonacci 0.618 extensions around $687 mark (not shown here). Third, the stock hits it’s down trend line and faces strong resistance around $690 zone. If all the above convergences hold well, bears might be back in control soon.

Looking at the wave structure, Tesla had already terminated Waves 1 and 2 around $539 and $780 levels earlier. Since then, it has been carving Wave 3 lower and has been able to carve lower degree waves I and ii around $540 and $690 levels respectively.

Tesla is probably extending its Wave 3 since $780 levels and if the above is correct, traders might witness a sharp decline towards $400 and $300 mark going further.

Prepared by

Finacademy Technical Team