Tesla Tests Break Out And Flies North: What Does The Chart Say?

Tesla Inc TSLA shares were moving higher Thursday after the Federal Reserve calmed investors by leaving interest rates unchanged.

Despite increasing competition in the electric vehicle market, as traditional automakers such as General Motors Co GM and Ford Motors Co F switch their focus to EVs, Tesla still reigns supreme for the time being. As of February, 79% of all-electric vehicles on U.S. roads are made by Tesla.

Tesla’s stock has been in a long period of consolidation after making a Jan. 25 all-time high of $900 and on April 14 began a months-long downtrend that eventually helped it form into a tightening triangle pattern.

Currently trading down about 30% from its all-time high, Thursday’s bullish price action looks like Tesla could be headed for another rip north.

See Also: How to Buy Tesla Stock Now

The Tesla Chart: Tesla broke up bullish from a symmetrical triangle on June 14 and then spent the subsequent two trading days retesting the break-out. Initial big bullish volume on Thursday pushed the stock up toward a resistance level at $624 and allowed it to recapture a number of moving averages.

On Wednesday, Tesla’s stock printed a bullish green engulfing candlestick on the daily chart, which gave traders an indication the stock could see higher prices on Thursday. By noon today, the stock was in the process of repeating Wednesday’s candle and putting in another green engulfing formation.

Tesla is trading slightly above the eight-day and 21-day exponential moving averages (EMAs), which is bullish, but the eight-day EMA is trending slightly below the 21-day EMA, which is slightly bearish. Tesla’s stock was able to recapture the 200-day simple moving average (SMA), which indicates overall sentiment has turned bullish.

It’s important to note that the two commonly followed EMAs and the 200-day SMA have all aligned on the chart near the $610 area, which could provide good support for Tesla going forward as long as it can close the day above them Thursday. On the other side of the trade, a close below the eight-day, 21-day and 200-day moving averages could create a good deal of resistance.

Bulls want to see Tesla’s stock close above the three moving averages and for sustained bullish volume to drive the stock up over its higher resistance level at $624. If it can regain that level as support, it has room to move up toward the $660 level.

Bears want to see a close below the moving averages and for the stock to trend under them until it’s pushed down under the $596 mark. If Tesla’s stock loses the level as support, it could revisit $571.

TSLA Price Action: Tesla was trading up 1.7% to $615.30 at publication time.