Tesla Shares Still in Correction Mode

Tesla Shares Still in Correction Mode

Tesla Shares Still in Correction Mode

Tesla shares have been rallying throughout February but scrolling further back reveals that this might just be a huge correction from the previous sharp drop. Price is currently at the 50% Fib level and might be able to pull up to the 61.8% retracement level closer to the trend line and moving averages.

The 100 SMA is below the 200 SMA, confirming that the downtrend could carry on, possibly if the resistance around $200 holds. This also coincides with a previous support area, which means that plenty of traders are watching that particular level.

Stochastic is already indicating overbought conditions so buyers might need to take a break soon and let sellers take over. Similarly, RSI is in the overbought area but hasn’t shown any signs of turning lower just yet.

A bounce off the $200 area could lead to a drop back to the previous lows around $141 or much lower. Tesla has been facing a lot of stiff competition when it comes to electric cars manufacturing, possibly dampening demand for its own products.

As it is, Tesla is still facing major crossroads when it comes to electronic vehicle sales in certain states, as a bill backed by General Motors might require the company to sell only through traditional dealerships.¬†However, Tesla CEO Elon Musk continues to lobby for special incentives for companies that promote the switch to sustainable energy, such as Tesla’s green car initiative.

Another factor that could keep a lid on Tesla shares gains is the low price of fuel, as this is giving consumers less reason to switch to an electric car, which often comes at a higher price tag. Still, an upside break past the trend line resistance around $200 could mean a longer-term uptrend for Tesla shares.



To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

For free forex trade signals, sign up on Trade24 here
Previous articleNZDUSD Forex Forecast – Bounce or Break from Range Support?
Next articleGBPNZD Forex Forecast – Resistance at 2.1500?
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.