In this chart lesson, we will examine how TSLA was able to bottom after dropping to $180 and then quickly rising to $380 within a couple of months.
This is the stuff where one wishes that they have bought a beaten down stock near its lows and enjoyed the benefit of it rising by more than 100% in a short period of time.
Let's take a look at how TSLA did it.
Let's take a look at the weekly chart first.
As you can see, TSLA really did suffered a lot as it dropped to around $180.
TSLA gave a first hint of a change of trend when it broke above a weekly downtrend line. Then it traded sideways and eventually formed a weekly cup with handle pattern.
Once it broke above the handle the stock rose nicely to reach the previous highs.
Perhaps a good way to learn why the stock bottomed at around $180 is to take a look at the monthly chart of TSLA. As you can see, the stock had a long term support around the $180 area.
Long term support areas are places to watch for a potential reversal.
Finally, when we look at the daily chart of TSLA, we can see that the stock made higher lows after June.
It continued to stay above the uptrend line and this showed strength in the stock. Notice how the stock also formed a daily triangle and broke out of it.
One could have bought a triangle breakout.
By looking at the different time frames we can see how support and chart patterns help to tell us that a stock wants to bottom. Let us learn from this and hopefully we can spot more bottoms in the future.
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This week let us take a look at the SPX and TSLA. See what we can learn from their charts.
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