Tesla Stock Is Coiled Up In A Pennant Pattern And About To Break

Tesla Inc. TSLA shares are trading lower Tuesday, cooling off after the stock beat earnings Monday afternoon.

The company reported earnings per share of $1.45, beating the estimate of 96 cents. The company had revenue of $11.96 billion, up 98% from the same quarter a year ago.

Tesla was down 2.7% to $639.28 at last check. Below is a technical look at the stock's chart.

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Tesla Daily Chart Analysis

• Shares are forming into what technical traders would call a pennant pattern and are close to the end of the pattern. A breakout could happen anytime with above-average volume.
• The stock is trading above the 50-day moving average (green), but below the 200-day moving average (blue), indicating the stock is likely facing a period of consolidation.
• The 50-day moving average may hold as an area of support while the 200-day moving average may act as a place of resistance.

Key Tesla Levels To Watch

• The pennant pattern began forming in late 2020, and may see a breakout within the next week or so.
• The price has gotten condensed tighter and tighter and now doesn’t have many places to go. The stock will see a breakout soon, but is unknown whether the break will be of support or resistance.
• The Relative Strength Index (RSI) has been floating around 50 for a few months, unable to cross into overbought or oversold territory. When a breakout comes, the stock will likely see a strong upward or downward movement on the RSI, likely in the same direction as the price movement.

What’s Next For Tesla?

Bulls want to see the stock breakout and move higher. A breakout would likely be followed by a period of consolidation where bulls would like to see the stock consolidate while being able to hold some of the gains made by the breakout. Consolidation with held gains may let the stock continue higher.

Bears would like to see the stock break out of the pattern below the pattern support. If the stock saw a drop below the pattern support and had a period of consolidation below, it may see a further bearish push.