At Tricio we look at charts in order to gauge investor sentiment and behaviour. The latest Tesla news is that the last quarter saw deliveries fall 5% from the same time last year, but the market had been braced for a lot worse news – so the share rallied! You would have to be a financial market professional in order to make sense of this, or simply go with the ‘sell the rumour, buy the fact’ approach to investment life.
The weekly chart below (with 13 and 50-week moving averages) shows the share price bouncing hard on the news with a falling resistance line under pressure. Trendlines are seen as giving insight into supply and demand for the share. A falling line off the highs (resistance) marks supply – sellers are happy to dump the share at this level and overwhelm buying demand, so the price falls away again. If this line is broken then this can be a decent signal that sentiment is changing – demand is overwhelming supply so the price is rising. Simple, right?
We can add some bits and bobs to the picture in order to add some further information that may be useful. The daily chart below (with 20, 60 and 250-day moving averages) shows the same falling resistance line in play. The red lines are from the gap break lower from July 2023 when the share was hit with bad news about margin compression and Cybertruck concerns. The fact that the share sold off just as the falling resistance line from the all-time high was being approached is (to chartists) not a coincidence. So the current test of this same line is potentially pretty important. A sustained break above the line should put the focus on the gap from the turn lower from July 2023. This makes the $279.56/$291.26 gap (open/close 20th July and 19th July, respectively) important to regain with the $300 area above this the ‘big figure’ level to break in order to help confirm a medium term shift higher.
Right now, see if the share price breaks the falling resistance and holds above it. The 20-day moving average and the gap from Monday’s close near $209.86 offer near term support, with the $200/$186 levels offering further support/near term risk below this.
Gerry Celaya, Chief Strategist
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