Tesla has managed to pull back towards $620 levels after dropping through $546 lows over the last week. The recent rally looks to be clearly corrective and might be lower degree wave iv, before reversing lower below $539 levels immediately.
Tesla is poised to break through $400 mark and take out support around $380 levels as seen on the 4H chart here. The tech stock might produce intraday rallies going forward, but these should be taken as opportunities to add short positions.
A minimum projected fibonacci targets are pointing towards $400 and $300 levels in the short term. Also note if the correction is at a larger degree like major indices Dow Jones and SPX500, Tesla may continue to drop well below $300 mark.
Immediate interim support is seen around $539, while resistance would be strong at $780 levels respectively. Counter trend rallies through $700 zone still remain possible and might provide potential selling opportunities.
Looking at the wave structure, Tesla had earlier produced an impulse rally between $37.00 and $900.00 levels since June 04, 2019. It is now unfolding a corrective drop at a similar degree and might have completed Waves 1 and 2 around $539 and $780 levels respectively.
It is expected to produce a 5-3-5 (Zigzag) or 3-3-5 (Flat) corrective structure going forward. A reaction around $300 levels will help determine the type and degree of the correction. Most traders might want to hold short positions in Tesla for now.
Finacademy Technical Team
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