Wondering whether you should be buying tesla stock? In this article we take a look at the stock chart of tesla through technical analysis.
This is a stock that promises the future. The future of cars. It has also made Elon Musk the richest man in the world. Perhaps it may be good to have some Tesla stock in your portfolio. Hopefully this analysis can help you to better time when to buy this stock.
This is an update on Tesla stock. I made an analysis just two days ago. But as you know, in the stock market, things can change very quickly and when certain developments happen we should always be aware of them.
If you look at the daily chart of TSLA, you may find that it is making a triangle pattern as it hugs the 200 MA. I have often found that when a stock makes a triangle at the 200 MA, it can bottom.
A triangle can work both ways, if it breaks out higher, then we may see TSLA going higher. On the other hand, if it breaks below the triangle, then we may see a continuation of the sell off in Tesla stock.
A gem I would like to offer you is that if a stock is near the 200 MA, it might be beneficial to look at some longer term call options or bullish debit spreads to capture the gains in the event that the stock finds support at the 200 MA.
The charts that I will be showing you is taken on March 15 2022 and at this moment the technical picture for Tesla's stock is not very robust. A short answer to whether you should be buying Tesla's stock for a trade or an investment is a "no". Not at the moment.
Let's take a look at the charts to get a clearer picture.
The chart above is the daily stock chart of Tesla. At this moment it is below the 20 MA, 50 MA and 200 MA. This is not picture of a stock that is likely to go up. Back in October, you can see that the stock is above its rising 20 MA, 50 MA and also the 200 MA. It was a picture of health and the stock was going up and up.
Currently, Tesla is trading below its declining 20 MA and 50 MA. I do not think it is a good candidate for long trades. Perhaps it will be better to see it go back above the 20 MA at least.
Usually when a stock drops to the 200 MA, it can be a good area to invest in the stock. But the stock seems very weak and the 200 MA is not holding. I do not see a bullish reversal pattern yet but perhaps we are very near. Whenever a stock drops to the 200 MA it is always a good idea to put in on the watchlist and see what it may do next.
If you take a look at the weekly chart of Tesla above you can see there is a long term support area from $550 to $700. That will be a congestion price area which you can see on the left. Although there is no bottom yet in Tesla, I think it is very likely that Tesla may bottom at this area.
If Tesla drops below this green area, then this will be the break of a long term support and this means that Tesla could be heading below $500.
I like to look for the presence of downtrend lines to determine whether a stock is bottoming. You can see one nice downtrend line back in 2021. The stock broke above the downtrend line around July 2021 and from there it went higher.
But this year, it is very difficult to see a solid downtrend line. That is something that makes me lack confidence of a bottoming at the moment.
So far, support still holds and this could give long term investors an opportunity to buy the stock at a cheaper price. If Tesla drops to the area of $600 to $650, this may be a good spot for long term investors to start buying the stock. After all it is a long term support area and you get Tesla shares for a 50% discount.
The chart above shows the 60 min chart of Tesla. Recently it broke below an uptrend line. This is bearish and not very conducive for longs yet. Notice how the stock is trading below its 60 min 20 MA, 50 MA and 200 MA. This is a bearish situation and therefore I advice you not to trade Tesla from the long side.
The best times to buy Tesla for long trades is when it is above the 60 min 20 MA, 50 MA and 200 MA. But as you can see, that is not the case at the moment.
Hope this analysis help you out.
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