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Time for a reality check on Tesla (TSLA) - Get Tesla Inc Report .

There was a potential blow-off top in Friday's session on the daily Tesla chart, suggesting that buyers are exhausted and that the stock is headed lower. A bearish engulfing candle formed and volume spiked over 150% relative to the 50-day moving average of volume, which is reflective of institutional selling. The stock has reached a price objective measured off the December 2016 low and rallied over 100% in that time, taking it into an extremely overbought condition. It may require a pullback to recharge its batteries, and a tradable intermediate-term top could be in place.

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The technical signs on the weekly time frame put the daily price action in context.

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Tesla had been making a series of 42-week cycle highs over the past three years that tested resistance in the $280.00 area. The brief pullback after the March retest this year was followed by a breakout that took the stock up to the $375.00 level. This is a measured move objective arrived at by adding the height of the December 2016 low to the $280 level, and then adding it to the resistance breakout. The high-wick candle on this chart suggests trader sentiment shifted quickly once the stock price reached the $375.00 level, and that is confirmed by the action on the daily time frame.

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A wide-range bearish engulfing candle formed in Friday's session on the daily chart. The high was made at the measured move target price and at the top of a regression channel calculated over that same time period. The relative strength index is moving down and out of its overbought zone but moving average convergence/divergence has yet to catch-up with the recent price action. Volume surged on Friday relative to the 50-day moving average of volume, and positive Chaikin money flow dropped sharply suggesting institutional distribution and a potential blow off top.

Tesla is a speculative short at its current level using an initial buy-to-cover stop above Friday's high. The fundamentals do not apply to this stock and while the technicals have done a better job of predicting price action, this trade requires close monitoring.

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This article is commentary by an independent contributor. At the time of publication, the author was short Tesla.