Don't Ignore This Chart

Tesla Weakens But Chart Is On Cruise Control

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Tesla (TSLA) remains a crowd favorite as the stock's 2017 advance has been accompanied by extremely heavy volume.  I see major accumulation when I look at TSLA's chart.  But like every other stock, momentum can become an issue from time to time and TSLA appears to be battling momentum issues.  Here's the latest weekly chart after TSLA dropped 7.56% last week:

Back in June, TSLA's weekly RSI moved above 80 and that's, quite frankly, an unsustainable level.  Consolidation began at that point and I expect to see one of two things moving forward.  Either TSLA continues to consolidate in a potential bullish ascending triangle with upcoming price lows in the 340-350 area or the slowing momentum results in a drop back to test recent lows and price support from the 280-300 range.

In either case, I'd be a buyer of TSLA.  Obviously, the best reward to risk would be that 280-300 test, but I'm not sure we get there.

Happy trading!

Tom


 

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Tom Bowley
About the author: co-founded Invested Central and served as the site's Chief Market Strategist for more than 10 years. His unique trading style combines both his fundamental and technical strategies to systematically manage risk while trading. A regular contributor to StockCharts.com's bi-weekly ChartWatchers newsletter since 2006, Tom's role at StockCharts has expanded significantly since he joined the company as a full-time Senior Technical Analyst in March of 2015. Learn More
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