Tesla Breaks Down From Trend Ahead Of Shareholder Meeting: The Bull, Bear Case For The EV Stock

Tesla, Inc TSLA stock was sliding Monday after filling an upper gap on Friday and rejecting at the top of that range, which Benzinga said was likely to happen on May 8.

The stock has been trading mostly sideways since that date, ahead of the EV giant’s annual shareholder meeting, which is set to take place on Tuesday after the market closes.

Traders and investors will be listening closely to discussion on five proposals that shareholders will have the opportunity to vote on. Four of the proposals have been brought forward by the company and one proposal was sponsored by shareholders. Read more here...

Ahead of the event, Tesla was breaking down from an uptrend, printing a lower low, which could indicate a new downtrend is on the horizon.

A downtrend occurs when a stock consistently makes a series of lower lows and lower highs on the chart. The lower lows indicate the bears are in control while the intermittent lower highs indicate consolidation periods.

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The Tesla Chart: After attempting to push back up into the gap on Monday, Tesla rejected at the lower range and started to fall lower, dropping under a solid support area near $166. The price action caused Tesla to print a lower low under the most recent higher low of $166.71, which was formed on May 9, May 10 and May 11.

• If Tesla closes the trading day flat or near the low-of-day, the stock will print a doji or inverted hammer candlestick, which could indicate a bounce is in the cards for Tuesday. If that happens, bullish traders want to see Tesla break above $177 fairly quickly, which would negate a possible downtrend.
• Bearish traders want to see Tesla print a bearish reversal candlestick under that level, which would confirm a new downtrend with the formation of a lower high. If that happens, Tesla could retrace toward $152 before the next bounce.
• Tesla has resistance above at $166.71 and $177.59 and support below at $152.19 and $139.53.

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Photo courtesy of Tesla.