Double Top Suggests Potential Selloff for Tesla Shares

Double Top Suggests Potential Selloff for Tesla Shares

Double Top Suggests Potential Selloff for Tesla Shares

Tesla shares could be in for a long-term tumble, as a double top pattern can be seen on its 1-hour chart. Price seems to have broken below the neckline around $255/share and may be due for a selloff until the next support around $240/share.

However, the stock made a strong bounce off support at $250/share while stochastic has reached the oversold region. RSI is also indicating oversold conditions, which means that a bounce is possible.

The moving averages are painting a different picture, with the 100 SMA getting ready to cross below the 200 SMA and suggest that the path of least resistance is to the downside. Nonetheless, a sustained rally could mean that Tesla shares still have a shot at climbing back to the previous highs around $280/share.

Tesla Shares Outlook

Tesla shares were off to a weak start this week, as investors downgraded their outlook for the company following another tumble in Chinese equities. The Chinese government has already put a lot of measures in place to stem the decline but it appears that weak financial confidence is starting to weigh on the markets and possibly on electric car sales in the country.

“China is the world’s largest auto market. If there’s a long downturn in China it would hit luxury carmakers,” said Theodore O’Neill, senior research consultant of Ascendiant Capital Markets. “The expectations are extremely high for Telsa’s growth rate.”

The company has recently highlighted China as a potential source of growing revenues, as wealthy Chinese investors have been purchasing electric cars. If their sentiment sours, then sales of luxury cars could also take a hit. “Despite initial challenges in China, we plan to continue to invest in our infrastructure in China as we believe that the country could be one of our largest markets within a few years,” the company said in its first-quarter earnings statement.

To contact the reporter of the story: Samuel Rae at

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.