After a decent rally during the second quarter of the year, Tesla shares are on the decline once more. Resistance at the $280/share level kept gains in check, pushing the stock back down towards support around the moving averages.
A break below the 200 SMA could mean a move back to the bottom of the range around $180-200/share. A bounce might be possible, though, as stochastic is already indicating oversold conditions. RSI is also near the oversold area as well.
For now, the 100 SMA is above the 200 SMA, also suggesting that the path of least resistance is to the upside. This could spur a bounce back to the top of the range around $280/share, which might continue to hold as a ceiling for Tesla shares.
Tesla Shares Outlook
Tesla shares suffered a selloff earlier in the year when the impact of falling oil prices weighed on the global economy. Apart from dragging risk appetite and higher-yielding equities lower, this also spurred weaker demand for electric cars since gas prices were getting cheaper.
This time, another leg lower in oil prices might be seen as the OPEC declined to scale down production. US shale oil producers are also ramping up their operations, although some analysts say that some companies might be forced to shut down since profitability is falling. In any case, Iran is still looking to double its oil supply to make up for its lost export revenue when the sanctions were still in place, also leading up to a potential downturn in prices.
With that, Tesla shares are facing the possibility of another decline and probably a break below the range support. Keep in mind that Tesla has been hopeful that their electric cars will see more demand in China, but the Chinese central bank’s decision to devalue the yuan could hurt domestic consumption.
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