After breaking below a head and shoulders chart pattern last month, Tesla shares found support at the $220/share level and 200 SMA. Since then, price has rebounded up to the $240/share levels and is continuing its climb. MACD is confirming the return in buying pressure, as the indicator is moving higher.
RSI is also supporting further gains for Tesla shares, with the oscillator climbing past the halfway point and making its way to the overbought area. This could mean that Tesla shares could test the broken support at the 50 SMA, which coincided with the neckline of the head and shoulders pattern.
Tesla Shares Outlook
Resistance at the $250-$260/share levels might hold and push the pair back down, creating a larger reversal formation on the daily time frame. This time, the neckline will be located at the $220/share level if the pattern is completed.
However, a move back above the 50 SMA could signal that Tesla shares are done selling off and may be due to resume its longer-term climb. After all, the shorter-term 50 SMA is still moving above the longer-term 200 SMA, confirming the uptrend.
A climb past $260/share could mean a move to the previous highs at $290/share or possibly until the $300/share psychological mark. Risk sentiment seems to be favoring US equities for the time being, as the Federal Reserve reiterated its positive assessment of the economy and hinted that a rate hike might be in order early next year.
The upcoming jobs release from the US might add support to this claim, with a strong showing likely to boost the US dollar and equities higher. On the other hand, a bleak figure could lead to an early selloff for Tesla shares and a potential break below the previous support at the $220/share area.
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