On the weekly chart the stock can be seen oscillating within a wide horizontal channel for the last 22 months. The 40-week (200-day) moving average has flattened out and is positioned at the midpoint of the channel range. This reinforced level of resistance has contained the upside for the last two months and an trend line line drawn off the lows of the year has provided support, creating a narrow interior channel within the wider channel. An interior channel breakout suggests a continuation of the larger pattern cycle and a return to highs of the year.
The smaller channel can be seen in greater detail on the daily chart. There have been three tests of the pattern support level, and Friday's close was a third test of resistance. The relative strength index has been tracking above its rising 21-period signal average for the last month and has moved above its signal line, and moving average convergence/divergence has made a bullish crossover and is above its centerline. Both oscillators are reflecting positive price momentum. Chaikin money flow moved above its signal average and into positive territory, suggesting renewed buying interest in the stock.
A break above the double reinforced interior channel resistance level is a significant technical accomplishment and targets a return to the reaction highs of the larger trading channel or approximately a 20% gain in the stock price. Tesla is a speculative buy after an upper candle close above the $234 level, trailing a close percentage stop loss.