TSLA shares seem to have exhausted its rallies, as price formed a head and shoulders reversal chart pattern on its weekly chart. The price is hovering near the neckline of the pattern around the $225/share level and the 50 simple moving average support.
For now, the shorter-term 50 SMA is moving above the 200 SMA, indicating that the longer-term uptrend might stay intact. A break below the 50 SMA, however, could mark the start of a selloff for TSLA shares until the $200/share level.
Tesla Shares Outlook
On the other hand, a bounce off the 50 SMA and current support zones might invalidate the reversal signal and lead to a climb back to the previous highs around $300/share or higher. Instead of completing the head and shoulders pattern, this might lead to the formation of a rising wedge on the weekly chart.
MACD is moving down though, indicating that there might be enough selling pressure to trigger a downside break of support. RSI is also heading south, suggesting that TSLA shares might do the same.
Future price action could hinge on the outcome of the US non-farm payrolls release today, which is likely to have a huge impact on overall market sentiment. Strong data could be positive for US equities, as it would reflect improving economic fundamentals with the promise of low rates from the Fed. On the other hand, bleak results could undermine the idea that the US recovery is gaining traction, which might lead to profit-taking and short-term weakness for US stocks.
On shorter-term time frames, TSLA shares have closed below its 200 simple moving average, indicating the possibility of a downtrend. However, the 50 SMA is still moving sideways, suggesting that price could also stay in range and possibly offer good opportunities for traders to buy TSLA shares at lower prices.
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