Skip to main content

Tesla Chart Faces Key Hurdle. Here's What Happens If It Fails.

Tesla stock faces a key hurdle on the charts. Here's what happens if resistance rejects it.

Tesla  (TSLA) - Get Free Report, Apple  (AAPL) - Get Free Report and a handful of other stocks have shown relative strength in the face of the recent stock market decline.

That may be coming to an end as the bear market dials up the heat, as it’s starting to hit everything in its path.

Shares of Tesla popped on Tuesday morning. Part of that strength was a broad-based rally in stocks, particularly in growth and tech stocks.

But the rally also came amid reports that the automaker is having a “very high volume” production push as the end of the third quarter is just days away.

While that does matter, the stock’s likely to ignore the news if things get ugly. Where Tesla is on the charts doesn’t help matters.

Trading Tesla Stock

Daily chart of Tesla stock.

Daily chart of Tesla stock.

In September, Tesla stock double-topped in the $315 area. 

The stock pulled back, the 50-day moving average and the $270 area acted as support, and Tesla rallied and gave $315 another shot. It failed again and now after a quick three-day dip, we’ll see what Tesla’s really made of.

The 50-day didn’t act as support, but the $267 to $272 area did, just as it did about a month ago. Now the stock is trying to rally again, and Tesla faces a brick wall near $290.

That wall includes not only the 10-day, 21-day, 50-day and 200-day moving averages — a rarity to have that many moving averages clumped together — but it also has the 50% retracement of the recent range.

If Tesla can clear this wall, it almost immediately opens the door back up to the $315 area and puts the bulls back in control.

But, ...

If Tesla can’t clear this area, then we must think of it as resistance until proven otherwise.

Should Tesla fail to reclaim the $290 to $292 area, then we must turn back our attention to current support, which has been $267 to $272.

Being tested a third time in just over a month would not be a good look and the bulls run the risk of a breakdown to the $250 zone. 

This was a major resistance area in the second and third quarters, so to retest this zone would be a major effort for Tesla stock and the bulls.

The bottom line: Active bulls may want to avoid Tesla in the short term, short of a close over $292.

In that scenario, $300 and $315 are the next levels of interest. If it can’t close above $292, $270 remains in play.