Tesla has rallied back to $743 after having tested $707 mark on Monday. The tech stock needs to break below $652 initial support to confirm a bearish reversal ahead. If primary Wave 2 is still unfolding, prices might test $780 mark before turning lower again.
Tesla’s preferred wave counts are presented below: The tech stock had dropped between $900 and $539 levels subdividing into 5 waves. The above impulse drop is marked as Wave 1 on the 4H chart here.
Ideally an impulse is followed by a corrective wave, which seems to have terminated around $765 mark recently. A running flat corrective wave might have unfolded as potential Wave 2 as labelled on the chart. If correct, Tesla would stay below $765 and drag below $652 support in the next few trading sessions.
Alternatively, bulls are still unfolding Wave 2 corrective rally that might terminate as a standard flat above $780 mark. Either way, Tesla is expected to stay below $900 resistance to keep the larger degree bearish count intact.
Traders might be preparing to initiate fresh short positions on a re-test of $780 resistance, against $900 mark, going forward.
Finacademy Technical Team
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