Tesla Edges Lower: Will EV Stock Develop New Chart Trend?

Tesla, Inc TSLA was trading lower Monday, in tandem with the S&P 500, which was reacting bearishly to jobs data reported on Friday when the market was closed.

The electric vehicle giant has seen bearish momentum after reporting production and delivery numbers for the first quarter as well as price cuts across several of its models. Tesla is hoping to boost demand for its vehicles amid increased competition in the EV market as more legacy vehicle owners roll out electric versions of their well-known models.

The bearish price action on Thursday and Friday caused Tesla to negate an uptrend in which the stock had been trading since March 13. The move lower also saw Tesla fall under the 50-day simple moving average, which creates another area of resistance for the stock.

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The Tesla Chart: Although Tesla negated its uptrend, the stock hasn’t yet confirmed a new downtrend is in the cards. For a downtrend to confirm, Tesla will need to pop up to print a lower high under the most recent higher high of $207.46, which was printed on March 31.

• Bearish traders and investors want to see Tesla form a bearish reversal candlestick, such as a doji or shooting star candlestick, under that level for a possible entry into a short position. Bullish traders may want to wait for Tesla to retrace after its next bounce, hoping the stock printing a higher low indicates the potential downtrend will serve as a bear trap.
• Tesla may have fallen through a rising channel pattern on the daily chart, which is bearish. For the pattern to be recognized, which could confirm a longer-term downtrend, traders will want to see Tesla continue to trade lower on higher-than-average volume on Monday and possibly Tuesday.
• Tesla has resistance above at $190.41 and $200.51 and support below at $177.59 and $166.71.

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