Tesla remains on track towards $400 and $300 mark!

Written by Finacademy.io

May 18, 2021

Technical Analysis:

Tesla continued its decline and is looking to carve an interim bottom around $550 levels or it has managed to carve around $559 recently. The tech stock trades around $576 levels for now and could pull back towards $670 levels anytime soon.

The above counter trend rally when materializes, should be taken as yet another opportunity to initiate additional shorts. Please note that downside potential remains towards $400 and $300 lows respectively.

Tesla wave counts since $900 highs are as follows: The drop between $900 and $539 could be Wave 1 since it was sub divided into 5 waves, making an impulse. The subsequent rally towards $780 highs unfolded into 3 waves a-b-c, hence corrective.

Also note that the correction had reached fibonacci 0.618 retracement of Wave 1, a common guideline for termination of Wave 2. If the above structure holds well, Tesla would be seen to be trading around $400 and $300 levels in next few weeks.

Wave 3 seems to be already underway since $780 highs and all rallies should be corrective from here. It is quite possible that lower degree wave I of 3 is in place at $559 or could be soon in place around $549 levels, going forward.

If correct, Tesla might produce a lower degree wave ii of 3 towards $670 levels before resuming lower again. Traders might take partial profits around current levels and prepare to initiate shorts at higher levels again.

Prepared by

Finacademy Technical Team

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