After selling off throughout the last quarter of 2014, Tesla stock appears to have bottomed out and ready for a reversal. A double bottom formation can be seen on its daily time frame, indicating that an uptrend is due if price is able to break past the neckline of the pattern around the $230/share level.
MACD is pointing up, indicating that further gains are possible. If the uptrend is confirmed, Tesla stock might be able to climb to the next area of interest at $260/share or perhaps until the previous highs around $280/share.
Tesla Stock Outlook
RSI is also moving higher but is almost on the overbought area, indicating that buying pressure might weaken soon. In addition, price is almost at the resistance around the simple moving averages. Take note though that the shorter-term 50 SMA is moving below the 200 SMA for now, indicating that the downtrend is still intact.
The recent rebound in oil prices is renewing support for Tesla stock, as this might lead to more company revenues if demand for electronic cars and alternative fuel picks up. Apart from that, risk appetite appears to be picking up as central banks have eased monetary policy and promised more stimulus if needed.
However, if the resistance around the simple moving averages and formation neckline holds, Tesla stock could head back to its previous lows near $190/share for another test of support. A break below this level would indicate that selling momentum is growing and that further losses are likely.
A bounce off support could create a triple bottom pattern, which is still a valid reversal signal. The upcoming NFP release could be a catalyst for a strong move for Tesla stock, as this could provide more clues on how the economy is performing and whether or not the Fed could afford to hike interest rates later on.
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