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Tesla's Key Trading Levels to Know Ahead of Earnings

Tesla is set to report earnings Wednesday. After a dip leading up to the results, what should investors expect? Let's look at the charts.

One of the most tantalizing stories in the stock market this year has been Tesla  (TSLA) - Get Tesla Inc Report - and it will remain that way with earnings scheduled for Wednesday after the markets close.

Tesla always has garnered its fair share of headlines, but the action in 2020 has been quite extraordinary.

That’s mainly as the stock came roaring into the year, was crushed 63.8% in 30 trading sessions, then rallied more than 600% from the March lows to its highs on Sept. 2.

Once Tesla's stock split went through, shares topped out. It didn’t help that the rest of the market was pulling back too, and that Tesla raised more cash even though it made sense to do so. 

But what really made Tesla special in 2020? It's the fact that its market cap surged up to $463 billion at the highs.

Trading Tesla

Daily chart of Tesla stock.

Daily chart of Tesla stock.

Luckily for bulls, Tesla didn't come surging into the print even with a pre-earnings upgrade. That type of price action almost always creates a sell-the-news event and at the very least makes it difficult to rally further even when the numbers are good.

As you can see on the daily chart above, shares are coming into the 50-day moving average. This mark was support twice last month and bulls will look to this level as support once again ahead of earnings.

On the weekly chart below, once can also see that the 10-week moving average - which is a bit lower near $402 vs. $411 for the 50-day - has been support since being reclaimed in April.

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Weekly chart of Tesla stock.

Weekly chart of Tesla stock.

If the 10-week and 50-day moving averages fail as support after earnings, that could turn into a bearish development in the intermediate term.

It has the potential to put the $330 to $350 zone in play, which is highlighted on both charts with a blue box. That was a supply zone (resistance) in July, before turning into a demand zone (support) in September.

Should Tesla stock fall that far, investors will once again look for this area to buoy the stock. Of course, it helps that the 100-day moving average comes into play at $330.

To get there, Tesla stock would need to fall roughly 20% from current levels. Going into the event, that type of decline doesn’t seem to be in the cards, but you never know. It could take days or even weeks for it to get there.

If it does though, this area should at least give the stock a bounce.

On the upside, I want to see Tesla clear $465. Not only would that give the stock a weekly-up and monthly-up rotation over last week’s and last month’s highs, but it would send it over a notable level of resistance.

In doing so, it would put the all-time high at $502.49 in play, followed by the 361.8% extension up at $517.63.

In a nutshell, keep an eye on the 10-week moving average on the downside, or roughly $400. On the upside, watch for a move above $465.