To reply the query from the title: Nothing is flawed with Tesla (NASDAQ:), and I feel it may possibly nonetheless fly greater. It’s merely digesting a few of its current astronomical beneficial properties. Enable me to elucidate utilizing Elliott waves.
Determine 1 beneath reveals the weekly chart of Tesla. I do know it’s a busy chart, however there are a number of key takeaways from it. Let me begin with the technical indicators.
1) 4 out of 5 prior instances Tesla was this overbought on the weekly RSI5, Cash Circulation Index, and Stochastic oscillator it corrected (vertical traces). Tesla is now as overbought and correcting.
2) The Elliott wave rely I’ve for Tesla is that it’s now in (pink) intermediate-iii of (black) major-Three of (blue) Main III/C of (purple) Cycle-3/C.
Why do I label the extra important levels as numbers (5 waves up) and letters (three waves up)? I have to stay intellectually trustworthy as a result of I can’t know beforehand if Tesla will transfer greater in 5 or three bigger waves. This unknown is the blessing and the curse of Elliott wave. The blessing, as a result of if price in some unspecified time in the future drops beneath a particular price stage, we all know it is going to solely do three waves up. If it doesn’t fall beneath it, and strikes greater, then will probably be 5 waves. One can use that sure price stage as a cease. The curse, as a result of from a buy-and-hold perspective, you have no idea beforehand when the music will cease taking part in. However that’s the reason one should all the time use stops anyway.
Determine 1, weekly chart.
That mentioned, Tesla ought to now be in (pink) wave-iv earlier than shifting greater for (pink) wave-v to finish the anticipated “wave-3?”
The every day chart, with price motion during the last six months, in Determine 2 beneath reveals extra element.
The Elliott wave rely for the reason that mid-March low took some time to crack, however ultimately, it aligned completely with the wave rely proven on the weekly chart. I, due to this fact, want to see Tesla goal ideally between $1,369-$1,320 for wave-iv earlier than shifting greater to new All-time Highs (ATH) for wave-v of three. The rally over the previous seven buying and selling days was overlapping and, due to this fact, counts greatest as a (inexperienced) b-wave. Now, wave-c of wave-iv needs to be underway. Notice Tesla may even drop as little as $1,106-$1,093 for wave-iv with none points. This drop would fil the early-July hole.
Backside line: There may be nothing flawed with Tesla and its stock. In my humble opinion, based mostly on technical analyses and Elliott wave, it’s correcting earlier than shifting greater once more. The correction ought to ideally stall round$1,370+/-50 however may drop as little as $1,100+/-5. A transfer beneath that decrease stage might be a critical warning for the bulls that the chances for extra upside are getting very slim. Thus, as ordinary: know your buying and selling timeframe, know your ache stage, and by no means assume something. Hope will not be a worthwhile technique.
Determine 2, every day chart
