Tesla Shows Signs Of An Imminent Bounce: Here's What To Watch

Tesla Inc. TSLA was trading flat in the premarket Tuesday after forming a long-legged doji candlestick on Monday, which indicated a bounce may be in the horizon.

The stock has suffered eight bearish red candlesticks in a row, plunging over 21% since opening the trading day on Sept. 29.

On Monday, Morgan Stanley analyst Adam Jonas maintained an Overweight rating on Tesla and cut the price target from $383 to $350. The new price target suggests about 57% upside for the stock.

See Also: Tesla Stock Drops On Heels Of Deliveries Miss, Supply Concerns

Despite missing analyst estimates for deliveries in the third quarter, Tesla rolled out a record number of vehicles and gained ground in Germany during September.

The tech-giant's Model Y became the number-one-selling EV in Germany for that month, taking the top spot from Volkswagen.

Tesla’s accomplishments haven’t helped the stock, however, which has been dragged down by the general markets, which have been experiencing a long-term bear market for most of 2022.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial

The Tesla Chart: Tesla is trading in a downtrend, with the most recent lower high form on Sept. 28 at $289 and the most recent confirmed lower low printed at the $270.31 mark on Sept. 26. The stock hasn’t bounced to form its next lower high in eight trading days, making a bounce likely to come over the next day or two.

• On Monday, Tesla printed its long-legged doji candlestick after dropping down to test a lower ascending trendline of a triangle pattern. The trendline has been holding as support since March 5, 2021, which makes it likely that the trendline will continue to hold.
• If Tesla drops down from the lower trendline of the triangle pattern on higher-than-average volume, it could indicate that a much larger move to the downside could be on the horizon. If the stock bounces up from the area on Tuesday or Wednesday, a short-term bull cycle becomes the most likely scenario.
• There’s a gap above on Tesla’s chart that falls between $257.50 and $262.47. Gaps on charts fill about 90% of the time, which makes it likely the stock will eventually bounce up to fill the empty range. If that happens over the next few trading days, bearish traders can watch for Tesla to top out near the top of the gap and print its next lower high.
• Tesla has resistance above at $225.03 and $234.35 and support below at $213.13 and $200.51.

See Also: Tesla Is Once Again Using A Loophole To Deliver Vehicles Direct In New Mexico