TESLA Stock - Can TSLA Top Out Here?
TLDRIn this video, the speaker discusses Tesla's recent stock performance, noting a 1.72% rise, driven in part by positive China market news. The focus is on technical analysis, especially the appearance of a 'Doji candle' signaling indecision. The video explores Tesla's rising channel pattern and the potential for the stock to either break higher or face a significant pullback. The speaker highlights crucial levels, such as $265-$270, as key inflection points that may determine Tesla's direction in the coming months, with possible retracements or further gains depending on market reactions.
Takeaways
- 🚗 Tesla's stock closed up by 1.72% for the day, showing a respectable performance compared to the overall market.
- 🇨🇳 Tesla's stock may be influenced by China, where economic stimulus has led to a strong performance in Chinese stocks, benefiting Tesla due to its significant presence in China.
- 📉 Tesla formed a doji candle, indicating indecision in the stock's movement after recent rallies. This suggests the stock is uncertain about its next direction.
- 📊 Tesla is at a critical inflection point that could determine its trajectory for the coming days or weeks, with potential for either a continuation of the rally or a correction.
- 📈 The stock is currently trading within a rising channel, which is typically bullish, but Tesla is near the top of this channel, a point where it may top out.
- 🔁 Previous retracements from similar levels led to significant declines in Tesla stock. If history repeats, this could signal a potential drop to even lower levels.
- 🔍 The 786 Fibonacci retracement level is a crucial zone that Tesla is currently testing. A rejection at this level could signal a bearish turn.
- 📉 A failure to break above the 265-270 range could lead Tesla to retest previous lows around 180, with the possibility of even lower levels if bears take control.
- 📈 However, if Tesla breaks above 270 and continues higher, it could invalidate the previous bearish patterns and signal a more bullish trend.
- ⏳ Tesla has important upcoming catalysts, including delivery numbers and earnings reports in October, which could influence the stock's performance in the near term.
Q & A
What was the overall performance of Tesla stock on the day discussed in the video?
-Tesla stock closed the day up 1.72%, which was a solid performance compared to the market, which was up about half a percent.
What was one of the main reasons Tesla stock gapped up in the morning?
-Tesla stock gapped up in the morning due to positive China-related news, as the Chinese government was providing economic stimulus, which boosted several China-based stocks.
What is the significance of the 'Doji candle' mentioned in the analysis?
-The 'Doji candle' signifies indecision in the market. It shows that the stock is uncertain about its next move, either higher, sideways, or lower.
Why does the speaker mention the possibility of Tesla topping out?
-Tesla is approaching the top of a rising channel, and there’s a historical pattern where Tesla retraces from this level. The speaker suggests that this could be a critical inflection point for the stock.
What are the potential bearish and bullish scenarios for Tesla moving forward?
-In the bearish scenario, if Tesla fails to break above the 265-270 level, it may break down from the rising channel and drop below 180. In the bullish scenario, if Tesla breaks above 270, it could continue rising, though eventually, it will still retrace but not as sharply.
What are the key indicators being watched to determine Tesla's next move?
-The key indicators include the Doji candle (indicating indecision), overbought signals in the RSI and Bollinger Bands, and Tesla’s position within its rising channel.
What does the speaker say about Tesla’s relationship with Chinese stocks?
-Tesla has a significant business presence in China, so its stock sometimes moves in sympathy with the performance of Chinese stocks. On the day discussed, several Chinese EV companies saw substantial gains.
What Fibonacci retracement level is considered crucial for Tesla’s price action?
-The 786 Fibonacci retracement level is considered crucial, as Tesla has historically retraced from this level in previous rallies.
What does the speaker suggest about Tesla's long-term prospects if it breaks the rising channel?
-If Tesla breaks down from the rising channel without breaking the 265-270 range, it could head lower, potentially revisiting lows around 180 or even lower in the 160 range.
What upcoming events could influence Tesla’s stock movement?
-Key upcoming events include Tesla's earnings on October 24th, the Robo-taxi event, and delivery numbers expected on October 2nd, all of which could act as catalysts for stock movement.
Outlines
🚀 Tesla's Market Update and Membership Offer
The speaker introduces the video as another Tesla market update, discussing recent market activity and what to expect in the upcoming days, particularly the end of September. They emphasize that this is not financial advice and promote their YouTube membership, which offers access to intraday updates, technical analysis, and options insights on Tesla and broader markets for $3 or $5 a month. The speaker notes that Tesla closed the day up 1.72%, outperforming the general market, which saw a 0.5% increase. They attribute Tesla's rise to positive Chinese market sentiment, following government stimulus efforts, which also boosted other Chinese stocks like Nio and XPeng.
📈 Tesla's Indecision and Doge Candle Explained
The speaker analyzes Tesla's current price action, pointing out that the stock closed near where it opened, forming a 'doge candle.' They explain that this candle pattern signifies indecision, the first seen during Tesla's recent rally, and how it reflects uncertainty in the stock’s direction. The speaker delves into the broader market context, discussing Tesla's relationship with Chinese stocks and noting that while Tesla remains strong, it is at a crucial inflection point. They suggest that the stock could break in either direction depending on upcoming market action, especially during the rest of the week.
🔮 Potential Future for Tesla: Bullish or Bearish?
The speaker explores two possible future scenarios for Tesla based on its current price action. They highlight a pattern of behavior where Tesla, after a large drop, retraces to the 78.6% Fibonacci level before falling further. If Tesla follows this historical trend, the stock could soon face a significant decline. However, the speaker emphasizes that upcoming market catalysts, including Tesla’s earnings, delivery numbers, and the Robo-taxi event, could push the stock higher. They stress that while Tesla is in a bullish rising channel, it will eventually break out—either upward or downward—and this inflection point is critical for determining Tesla’s next few months.
🔍 Breaking Down Tesla's Channel and Key Resistance Levels
The speaker focuses on technical analysis, discussing the importance of Tesla’s current resistance level around $265 to $270. They outline two scenarios: if Tesla fails to break above this range, it could fall significantly, potentially down to $160. If it breaks above, however, it could indicate that the bearish historical patterns are no longer valid, and Tesla could continue to rise, though it will still eventually correct. They also reflect on past instances where Tesla defied expectations and argue that while it may seem improbable for Tesla to fall dramatically, such moves have happened before.
🤔 Tesla's Bullish Case and Risks Moving Forward
The speaker describes a more bullish scenario for Tesla, where if the stock breaks above the $270 level, it could continue its upward trend within the rising channel. In this case, Tesla would still eventually correct, but the drop would not be as severe as in the bearish scenario. They emphasize that a close above $265 to $270 would signify a major break from the past bearish trend, drastically reducing the chances of Tesla falling below $180. However, the speaker notes that nothing is guaranteed, and Tesla’s volatile nature means surprises are always possible.
⚠️ Indicators Show Tesla Still Bullish but Overbought
The speaker turns to technical indicators, noting that Tesla remains bullish in the short term. They highlight that while the stock is overbought on indicators like the Bollinger Bands and RSI, it is still showing strength, and no clear signs of a reversal are present yet. They mention that Tesla is nearing the top of its rising channel, which reduces the risk/reward ratio for further upward movement. Despite these overbought conditions, the speaker remains cautious, stating that they have not yet sold any covered calls and are waiting for more obvious signs of a top.
📅 Tesla’s Weekly Breakout and Long-Term Outlook
The speaker finishes with an analysis of Tesla's weekly chart, noting that the stock is breaking above a significant trendline on the logarithmic scale. They explain that if Tesla can close the week above this trendline, it would be a strong bullish signal. However, they caution that Tesla could still reverse before the week ends, just as it did two weeks prior. A confirmed breakout could see Tesla revisit the $232 to $233 support level, offering a potential long-term bullish setup. The speaker advises patience and careful observation in the coming days as the situation evolves.
Mindmap
Keywords
💡Doji Candle
💡Gap Up
💡Indecision
💡Rising Channel
💡Fibonacci Retracement
💡China Stocks
💡Overbought
💡Catalyst
💡Bearish Scenario
💡MACD
Highlights
Tesla stock closes up 1.72%, outpacing the broader market, which was up around 0.5%.
The gap up in Tesla's stock may have been influenced by positive news from China, where the government is injecting stimulus into the economy.
Tesla formed a Doji candle, indicating indecision in the market after a recent rally.
The Doji candle is the first sign of indecision during Tesla's recent rally, raising questions about whether the stock will go higher or lower.
Tesla is currently at an important inflection point, which could determine the stock's trajectory for the coming days or weeks.
The stock is still trading within a rising channel, but there are signs it might be approaching the top of this channel, potentially signaling a top-out.
If Tesla fails to break above key resistance levels, such as 265-270, there’s a risk the stock could fall back to previous lows, potentially below $180.
A break above 265-270 could indicate that Tesla is still bullish and might see further upward momentum, possibly reaching 280 or higher.
The stock could follow a pattern similar to previous rallies, retracing a large move upwards only to fall back down significantly.
Upcoming catalysts for Tesla include delivery numbers and an earnings report in October, which could influence the stock’s direction.
Indicators such as the MACD, RSI, and stochastic oscillator are still showing bullish signs, although overbought levels suggest caution.
The stock’s rise may soon face a correction, as it cannot stay in its current rising channel indefinitely.
Tesla has broken out of its logarithmic trendline on the weekly chart, which could be a bullish signal if it closes above this level by the end of the week.
If the stock closes the week below the trendline, it could pull back in a similar manner to previous false breakouts.
The overall risk-reward ratio for Tesla at current levels is starting to diminish, with a higher risk of downside the longer it stays in overbought territory.