Elon Musk's Tesla Stock Breaks Through Bellwether Resistance: The Bull, Bear Case

Tesla, Inc TSLA regained the 200-day simple moving average (SMA) on Tuesday, throwing the stock into a potential new bull cycle, indicating the bulls are in control, which Benzinga pointed out on Tuesday.

The move higher confirmed Tesla’s uptrend remains intact. An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.

The higher highs indicate the bulls are in control, while the intermittent higher lows indicate consolidation periods.

Traders can use moving averages to help identify an uptrend, with rising lower time frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend.

Rising longer-term moving averages (such as the 200-day simple moving average) indicate a long-term uptrend.

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The Tesla Chart: Tesla reversed course into an uptrend on April 27, printing the most recent higher low on Wednesday at $195.12 and the most recent confirmed higher high at the $204.48 mark the day prior. On Thursday, Tesla shot up above Tuesday’s high-of-day, but hasn’t yet confirmed the next higher high has occurred.

• The stock may have also printed a bull flag pattern near the 200-day SMA, with the pole forming between May 24 and Tuesday and the flag forming on the days that followed. If the pattern is recognized, the measured move is about 17%, which suggests Tesla could rise toward the $229 level.
• If Tesla shoots higher on Friday, a pullback is likely on the horizon because Tesla’s relative strength index (RSI) has reached about 73%. When a stock’s RSI reaches or exceeds the 70% mark, it becomes overbought, which can be a sell signal for technical traders.
• The Elon Musk-led company has resistance above at $213.13 and $224.13 and support below at $200.51 and $190.41.

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Photo: Tesla