TSLA: Decision time approaching
By:TradingView
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TSLA has recently broken out of the descending channel, only about to hit a resistance wall. The blue box resistance area will be a very important test for the stock. At minimum, we should see some reaction in this area. From there, the next 4 to 6 months of trend will be decided. These will be the most important price points to monitor:
1. On the bottom range, $364 must hold.
From EW perspective, I have 2 different counts in colors blue and black. The blue count assumes there is some kind of a C wave to the downside commencing to complete blue wave 2 in the intermediate degree (depicted with the red line). Immediate price action suggests a C wave to complete minute degree diagonal wave 4 that will fail the rally when it gets to minute degree wave 1 territory in the blue box. If this assumption is correct, then we should see price resuming to the downside. This count will take higher probability when $ 364 breaks. And the reason is, it will put the black count in question. If $340 breaks, then price is most likely heading to $250 or below.
2. On the top range ATH must break.
This takes us to the black count. Black count will assume price is in the minor degree C wave to complete intermediate degree wave 3 (depicted in the green line). In this case, Lower degree wave 1 and 2 are complete and price is on its way to a strong wave 3 of 3. This will be invalidated if $364 is broken. It will not be completely out of the picture but will make things a lot more complicated. But if price manages to breakout above the all-time high, then most likely the C of 3 is in play. It will be a very strong rally towards $800 and beyond.
3. Watching MACD action. If histogram creates a lower high as price moves in to the resistance area, it will be an early warning. If MACD sees a good expansion as price moves higher it will tip the probability towards a continued rally.
My plan of action is a short position in the blue box area. And then go long at around $375 area if we get a correction there. The stop loss from the short will be right above the blue box at around $454 and stop loss from long will be around $364. I will figure out entries and exits in the next few weeks and might need some buffer to get things right. TSLA moves fast, so being nimble is the best way. For now, the two price points are the ones to watch in the month of May.
1. On the bottom range, $364 must hold.
From EW perspective, I have 2 different counts in colors blue and black. The blue count assumes there is some kind of a C wave to the downside commencing to complete blue wave 2 in the intermediate degree (depicted with the red line). Immediate price action suggests a C wave to complete minute degree diagonal wave 4 that will fail the rally when it gets to minute degree wave 1 territory in the blue box. If this assumption is correct, then we should see price resuming to the downside. This count will take higher probability when $ 364 breaks. And the reason is, it will put the black count in question. If $340 breaks, then price is most likely heading to $250 or below.
2. On the top range ATH must break.
This takes us to the black count. Black count will assume price is in the minor degree C wave to complete intermediate degree wave 3 (depicted in the green line). In this case, Lower degree wave 1 and 2 are complete and price is on its way to a strong wave 3 of 3. This will be invalidated if $364 is broken. It will not be completely out of the picture but will make things a lot more complicated. But if price manages to breakout above the all-time high, then most likely the C of 3 is in play. It will be a very strong rally towards $800 and beyond.
3. Watching MACD action. If histogram creates a lower high as price moves in to the resistance area, it will be an early warning. If MACD sees a good expansion as price moves higher it will tip the probability towards a continued rally.
My plan of action is a short position in the blue box area. And then go long at around $375 area if we get a correction there. The stop loss from the short will be right above the blue box at around $454 and stop loss from long will be around $364. I will figure out entries and exits in the next few weeks and might need some buffer to get things right. TSLA moves fast, so being nimble is the best way. For now, the two price points are the ones to watch in the month of May.
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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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