Tesla (TSLA) Stock Chart Tune-Up

In my previous full-length Tesla (TSLA) stock chart update I discussed a “conservative” $400 price target for its share price. That article was titled “Tesla (TSLA) 2/11/2017 – “Conservative” $400 Price Target“. That February 11 stock update was requested by a Trendy Stock Charts member after noticing a $400+ price target on its P&F chart. The member wanted to see if that price target could be supported by any other methods of technical analysis, which I proved it was.

So let’s check in on the status of TSLA’s march towards the $400+ price targets.

TSLA – New All-Time Highs

Candlestick confluence areas can be very powerful support and resistance areas. This 5 year monthly chart illustrates a confluence of bullish reversal candlestick patterns. I discussed this confluence during my previous TSLA update. Each of the below bullish candlesticks have support areas near each other.

Then at the beginning of April, a Rising Window candlestick pattern developed on Tesla’s monthly candlestick stock chart. Rising Window candlestick patterns (gap-ups) are not very common on monthly charts. It is all about the timing of the gap-up, which would need to happen on the very first trading day of the month in a current uptrend. But one did happen on Tesla’s (TSLA) monthly chart.

Analyzing a Confluence of Bullish Candlestick Patterns on Tesla’s (TSLA) Monthly Stock Chart

TSLA’s share price broke through its overhead trendline resistance with the gap-up and also broke above the resistance area from February 2017’s Shooting Star candlestick pattern (not marked on the chart). It did this on above average buying volume.

So what can be expected from this potential breakout? Let start with the[s2If !current_user_can(access_s2member_level1)]………..

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If you are not a Trendy Stock Charts member, consider subscribing today! There are several different subscription plans available.[/s2If][s2If current_user_can(access_s2member_level1)] MACD Histogram that is currently showing its first signs of buying momentum in over 2 years. That is a definite longer-term bullish sign.

The Rising Window candlestick pattern (gap-up) on the monthly chart also comes through on the weekly chart (see next section). Monitor this gap-up. If the gap-up does not close by the end of next week, TSLA’s share price is most likely headed for the $385 price level quickly. That price level is identified by the blue Fibonacci Extension Tool above.

TSLA – Gap-Up Watch

This next chart is a 3 year weekly chart to zoom in on a little more shorter-term detail. It shows that TSLA only retraced 38.2% of its previous uptrend before breaking out to new highs. As mentioned above, because of the timing of the gap-up it also appears on this weekly chart.

Analyzing Tesla’s (TSLA) Potential Breakout on a Weekly Candlestick Chart

The MACD Histogram on the weekly chart illustrates the buying momentum was starting to slow, but has picked back up again during the breakout.

There has been a lot of buying volume since the end of 2016. This buying volume keeps increasing along with the buying momentum. While TSLA’s stock is priced on a hope and a prayer, it looks like someones prayer was answered because it is going higher. Regardless of its valuation.

The recent gap-up on the above chart appears to be the middle of a Wave 3 in a Bullish Impulse wave pattern. It fits all the characteristics of a Wave 3 in a Bullish Impulse wave pattern.

TSLA – Trading Strategy

One comment from my February 11, 2017 Tesla article stated

A pullback to the $250ish area where TSLA’s share price had a quick consolidation period during the current uptrend would be a nice spot to make an initial scale-in purchase.

I also had a lower “preferred” purchase area in the $220 – $230 range. I do not think this range was reached due to a secondary offering that was smaller than anticipated.

Regardless, that is why a scale-in strategy works best to work into a position. If you end up waiting for the lowest possible entry, sometimes you end up missing out on the trade entirely. Using both of those targets and a scale-in strategy, you would be at least partially invested in TSLA at the current time.

The current strategy appears to trade it up to the $350ish area, and then play a pullback. That pullback area has yet to be identified in the current Bullish Impulse wave pattern that is developing. The first significant pullback in the current uptrend will also be the pullback area after the uptrend ends.

Wait for a pullback to the $280ish area to make an initial scale-in purchase if you have delayed in making one.

Tesla (TSLA) Stock Chart Summary

Tesla’s (TSLA) breakout appears to be real. It has long-term upside of over 30%, even from its current share price. With no overhead resistance, its share price may seen some rapid price gains to push it along towards its overhead price targets.

If you did not make an initial scale-in purchase around the $250 area, then consider just making an initial scale-in purchase on any pullback to the $280 breakout area. Any re-test of the lower gap-up area could be used to make another scale-in purchase.

Remember that any breakout area has the potential for a re-test. Any successful re-test of the breakout area and rebound on above average buying volume is another opportunity to make a scale-in purchase.

While TSLA’s share price does not make any sense from a valuation perspective, it seems like it is about to make even less sense.

Good luck trading!