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Tesla Stock Has One of the Best Charts in Tech

Tesla stock has fared pretty well, while the overall market remains under pressure. Here's the trade.

It must be driving the bears crazy: Tesla  (TSLA)  has one of the best-looking charts in all of tech.

Despite the headwinds facing the market leader in electric vehicles, buyers continue to bid the stock price higher.

From a big-picture perspective, the stock market has been struggling. The S&P 500 fell 4.7% last week, while the Nasdaq shed 5.5%. The performance comes after a hotter-than-expected inflation report on Sept. 13.

Now the markets face the Federal Reserve’s interest rate hike today.

Meanwhile, Tesla stock gained 1.2% last week and continues to threaten a larger rotation to the upside. 

Not only is it outperforming many top tech stocks — with several FAANG names rolling over, as are favorites like Nvidia  (NVDA)  — it’s also outperforming its automotive peers, like Ford  (F)  and General Motors  (GM) .

Trading Tesla Stock

Daily chart of Tesla stock.

Daily chart of Tesla stock.

On the chart of Tesla stock it’s hard not to see a cup-and-handle pattern emerge. 

That’s as the shares broke below prior support at $325 and went on to carve out a big cup pattern. That was followed by a rally back into the $315 area and a more shallow dip down to the $270s — the handle.

What bulls are wondering now is simple: Can Tesla stock clear the $315 area?

Not only do we have multiple weekly highs in this area acting as resistance, but last month’s high is also there at $314.67. Further, the 61.8% retracement is nearby, at $316.35.

While that’s stacking up as resistance (or supply, if you prefer), it also creates a potential rotation spot that could trigger a much stronger move to the upside.

Although the $325 spot is not all that far away, that’s the first upside area to watch. Above that could trigger a move into the $345 to $350 area.

On the downside, watch $300 and the 10-day moving average in the short term. Not only is that a potentially relevant level from a psychological point of view, the 10-day has been active support amid the current move.

Below that puts in play the $292 to $293 area, which is where the 21-day and 200-day moving averages currently sit, followed by the 50-day down near $285. For what it's worth, the 50-day was notable support during last month’s correction.

In short, Tesla stock has displayed plenty of relative strength this month. Thus, it’s one stock to keep a close eye on for a potential trade on the long side.