Tesla progressing lower towards $400 at least

Technical Analysis:

Tesla bears seem to be in control as they continue to carve lower lows since $780 highs registered on April 14, 2021. As we have been discussing over the last several weeks, the tech stock might have carved a meaningful top around $900 levels and is now heading lower.

Tesla wave structure is indicating that a larger degree Wave 3 or C might be in progress since $780 highs. The earlier drop between $900 and $539 was subdivided into 5 waves hence impulse. It has been labelled as Wave 1/A on the chart here.

Also note that an impulse drop also confirms that move is incomplete and that one more low is required below $539 to complete the pattern. The rally between $539 and $780 was also in 3 waves hence corrective.

Further it stalled around fibonacci 0.618 retracement of the entire drop between $900 and $539 respectively. The termination around $780 has been labelled as Wave 2/B on the chart here. If the above structure holds well, Tesla would be heading lower towards $539 at least as Wave 3/C progresses.

The fibonacci extensions are pointing towards $404 and $319 levels respectively in the next several weeks. Also note that $319 was the beginning of previous Wave 4 triangle structure, a common guideline for bearish reversal.

Tesla has also broken below its counter trend line support and is seen to be trading around $629 levels for now. Immediate target seems to be $580 levels, which is also short term support.

Prepared by

Finacademy Technical Team