Technicals Suggest Weakness for Tesla (TSLA)

9 Jul 2023

Thanks to robust demand for TSLA—last week’s bullish weekend gap and June adding nearly 30%—a harmonic bat pattern’s potential reversal zone (PRZ) between $300.79 and $283.88 was identified on the weekly timeframe. As you can see, the aforementioned PRZ welcomed price in recent trading. Additionally, the weekly Relative Strength Index (RSI) is simultaneously on the verge of shaking hands with overbought territory. While this reflects a potentially bearish atmosphere, it’s imperative to note that price action could still test the entire space of the PRZ (as far north as $300.79). So, buyers may still push at least towards the converging weekly trendline resistance taken from the all-time high of $414.50.

Across the page on the daily timeframe, a Golden Cross (50-day simple moving average [$212.54] crossing above the 200-day simple moving average [$194.04]) formed in late June, traditionally recognised as a longer-term bullish trend signal. Yet, we can see that the RSI, also on the daily timeframe, threatens to form negative divergence at overbought territory.

Concerning technical structure on the daily scale, demand is visible at $247.51-$261.97, and a channel resistance entered the fray last week extended from the high of $214.00. Beyond here, resistance calls for attention at $311.46, plotted outside the weekly PRZ.

Ultimately, with daily channel resistance in play, aided by the daily chart’s RSI pencilling in possible negative divergence (and the weekly chart’s RSI within striking distance of overbought) and the weekly timeframe challenging the lower boundary of a harmonic bat pattern’s PRZ, this could prove a formidable (technical) headwind for buyers this week/this month. As such, dropping in on daily demand at $247.51-$261.97 should not surprise.