Shares of Tesla (TSLA - Get Report) have had a wild ride over the last three years, enjoying strong rally periods followed by sharp declines. The volatile price action, however, has followed a well-defined road map of trend lines and price patterns that have taken the stock to a technical crossroads. The intermediate term direction of the stock price will be determined by one of two future paths.
The rally highs (vertical red lines) have followed a 36 week cycle and the pullback lows (vertical green lines) have followed a 46 week cycle, with the net result being that both the cycle low and cycle high lines are meeting this month. The stock is currently retesting the $180.00 level which acted as support in 2014 and 2015, and the sloped rounded top trend line is pushing price lower. The intermediate term direction of the stock could be determined by how these factors play out on the daily chart.
On the daily timeframe shares have been making a series of lower highs above the long term $180.00 support level, in the process forming a triangle pattern. A "W"-shaped bottom has formed above horizontal support and below declining resistance at the $195.00 level, itself a former support level in September and October.
This former support-turned-resistance is being reinforced by the intersecting triangle downtrend line and the 50 day moving average. Moving average convergence/divergence and the relative strength index have flattened as the stock loses momentum near the triangle apex, but the accumulation/distribution line has recaptured its 21 period signal average and Chaikin money flow climbed back into positive territory.
The resolution to the counter play of these opposing technical forces will be determined by the integrity of the primary trend lines. A sustained move above the eight month downtrend line takes out the weekly rounded top and suggests the intermediate term direction of the stock is higher, while a break below horizontal support projects back down to the low in the $140.00 area made earlier this year.