Tesla might be preparing for a major bearish reversal anytime soon. The tech stock is expected to face strong resistance around 750-800 zone if prices manage to reach there. Ideally, prices are expected to stay below 900 highs carved around January 26, 2021.
Tesla had rallied from 35 lows through 900 highs since June-July 2019. The value of the stock had increased almost 25 times and has proved to be one of the value picks amongst investors. Looking at the wave counts through, the stock might have completed 5 wave rally between 35 and 900 levels.
Ideally, after an impulse (5 wave) rally, a corrective (3 wave) drop can be expected. If the above unfolds accordingly, Tesla might be preparing for at least a corrective drop towards 370-400 levels going forward.
Furthermore, the drop between 900 and 539 was also in 5 waves, marking the first impulse lower. It also indicates that drop is incomplete and Tesla is expected to print yet another low to complete the corrective structure, which could be a zigzag.
At the moment, Tesla is testing the backside of support turned resistance trend line around 660/70 levels. A push through 750 will face stiff resistance and prices might reverse sharply lower. Bears are looking poised to take control back either from here or from 750-800 zone.
A break below 539 will certainly confirm that Tesla has carved a lower high around 660/70 levels already. Watch out for a bearish reversal anytime soon towards 370 levels, as bears prepare to take control back.
Finacademy Technical Team
Gold prices dropped through $1773 lows on Thursday before finding support again. The drop from $1793 was in-line with price action of a gartley.
The US dollar index might have carved a lower high around 96.50 mark on Tuesday. The index dropped through 95.80 levels on Wednesday before finding some support.
USDJPY is soon approaching a formidable resistance zone around the 114.40-50 mark. The currency pair has been carving a corrective rally since 112.50 lows.