Tesla terminates Wave 2 below $780

Technical Analysis:

Tesla has reversed sharply lower to $718 on Monday, after hitting $760 highs over the last week. The tech stock has remained shy of $780 and might have terminated primary Wave 2 already. A break below $655 will confirm a bearish reversal.

Alternatively Wave 2 might terminate just above $780 mark in the next few trading sessions before Tesla could turn lower towards $400 and $300 levels. Bottom line for bears to remain in control is the $900 resistance.

Tesla had dropped between $900 and $539-40 levels subdividing into five waves, marked as potential Wave 1 on the 4H chart here. The subsequent rally has taken shape of a running flat 3-3-5 until now, labelled as a-b-c, potential Wave 2 here.

Further Wave 2 has re-tested the fibonacci 0.618 retracement of Wave 1, a common guideline of the Elliott Wave Principle. If the above count holds well, Tesla could remain below $780 mark and turn lower towards $400 and $300 as Wave 3 begins to unfold.

Traders might remain inclined to initiate fresh short positions with risk above $900 and potential target below $400 in the coming weeks. Break below $650 will accelerate downside.

Prepared by

Finacademy Technical Team