It could be time to sniff around Tesla (TSLA) again.

Tesla is approaching a very solid support zone this week. The stock, which entered extremely overbought territory last month, has been struggling since peaking near $390.00 on Friday, June 23. Today's news inspired breakdown has driven the stock down to a very solid support zone. For patient investors, a low risk entry opportunity could be fast-approaching.

Back on May 30, Tesla began the second leg of its powerful rally off the March lows. The stock broke out of a four week consolidation with the help of a 3% surge as May came to a close. This impressive breakout left behind a very solid support area as the stock began a 20% up move. If Tesla can regain its footing near this zone a fresh base could begin to form.

In the near term, Tesla bulls should keep a close eye on the $328.00 to $315.00 area. This key zone includes the initial May peak as well as the May 30 breakout gap near the upper band. The 1/3 retracement level of the entire 2017 range, as well an important trendline, are also near the upper band. The bottom of the support zone is marked by the April high. Despite the recent negative news, as well as June's extremely overbought reading, Tesla is likely to gain some traction as this major support zone is tested.

Tesla's shares fell 5.6% by Thursday's close.

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This article is commentary by an independent contributor. At the time of publication, the author was long Tesla.

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