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Is Tesla Stock a Buy or Sell After Q2 Deliveries Report? Check the Chart.

Tesla's second-quarter deliveries climbed year over year but fell from the first quarter. Here's how to trade the stock now.

Tesla  (TSLA)  stock was down as much as 4.8% in Tuesday’s trading session but has recouped those losses as investors digest the electric-vehicle maker’s delivery results.

General Motors  (GM)  was in focus late last week on its delivery results and now it’s other automakers’ turn.

Tesla delivered 254,695 vehicles in the second quarter, which was up 26.7% from the year-earlier quarter but down about 17% from this year's first-quarter results. 

Supply-chain woes weighed on production, while a 22-day lockdown-enforced shutdown for its Shanghai factory also hurt.

It has some investors wondering whether Tesla is spinning its wheels as the Austin automaker is no longer the world’s top-selling EV manufacturer. It also comes amid growing concerns of a recession.

As things stand, though, the shares are now flat on the day and are trying to push higher. Let’s look at the chart.

Trading Tesla Stock

Daily chart of Tesla stock.

Daily chart of Tesla stock.

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The $700 level was key support in late February, a level off of which Tesla stock erupted when it was tested. Now, the stock continues to chop around this mark, wedging into a tighter and tighter range.

That wedge pattern is defined by a series of higher lows and lower highs and is illustrated on the chart with blue lines. As of this morning, wedge support continues to buoy the stock.

Right near $700 are the 10-day and 21-day moving averages, creating even more directionless action as neither moving average seems to affect the stock price.

All of this is to say that until the wedge breaks, Tesla stock can continue to trade in choppy and sloppy fashion.

If the shares clear the $700 level — and thus the 10-day and 21-day moving averages — then it could see a rally up to wedge resistance and the 50-day moving average. The latter hasn’t been tested since early May, but at that time, it was resistance.

On the downside, wedge support is critical for the bulls. If it breaks, it significantly increases the odds that Tesla stock will rotate lower. Specifically, the $620 to $625 area will be on the table.

The 2022 low sits down at $620.57 and will be in play if Tesla fails to hold current support.

Below that could put $540 to $550 in play, followed by the major breakout level near $500.