Tesla stock is rallying nicely, but resistance looms overhead. Here are the must-know levels now.
Shares of Tesla (TSLA) – Get Tesla Inc. Report are rallying on Thursday and deservedly so. Up about 1.5% though and bulls were likely hoping for larger gains.
The move comes on reports that Tesla’s China-made vehicle sales almost tripled in August.
According to TheStreet: “The China Passenger Car Association (CPCA) said Tesla sold 76,995 China-made cars last month…The August figures were firmly higher than the 28,000 total recorded in July when Tesla’s Shanghai gigafactory was idled for scheduled maintenance, but essentially only match the 78,000 tally from June.”
Investors are relieved to see Covid-related lockdowns ease and for Tesla’s production to rebound. However, there are concerns about Tesla’s growth rate going forward given that August production was just shy of its June production.
The news comes a day after Nio (NIO) – Get NIO Inc. American depositary shares each representing one Class A 蔚来汽车 Report reported earnings and is struggling to rally.
Can Tesla shake off its recent selloff — down in three straight weeks — and regain its bullish momentum?
Trading Tesla Stock
Daily chart of Tesla stock.
Chart courtesy of TrendSpider.com
Amid a five-day losing streak that began in late August, Tesla stock lost uptrend support (blue line) as it traded down to the 50-day moving average. Also notice where resistance came into play, near $300.
That’s also where Tesla stock finds the 200-day and 50-week moving averages, along with the weekly VWAP measure.
On the plus side, the 50-day and $266 area held as support, as Tesla now tries to rally. Shares are leaning on a potential weekly-up rotation over last week’s high near $288.50.
If it can do that and close above that mark — or give bulls a two-times weekly-up rotation next week — Tesla stock could rally back up toward that $300 resistance area.
Above that opens the door to the $313 to $316 resistance zone, where Tesla previously double topped in August.
With the upside mapped out, what does the downside look like?
On the downside, I want to see Tesla stock hold the $275 level and 50-day moving average. A break puts the key $266 level back in play, followed by the 50% retracement at $260, then the 61.8% retracement near $248.
If the overall market can begin to push higher, then Tesla may go along for the ride. If it rolls over though, Tesla stock may have trouble sidestepping the decline.
