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Tesla Might Be Trapped in a Choppy Weekly Range Bound Trading?
DISCLAIMER: I am not a financial advisor nor certified analyst, and definitely not a pro trader. All contents discussed on this article are solely my own views and for trading education/entertainment purposes only. Trading and investing in stocks especially in form of CFDs are extremely risky where losses can exceed deposits. Enter with discretion. Do your own utmost researches and due diligences. The basis of this article is pure technical analysis speculation.
Hello once more. This will be my first ever Finlogix technical analysis covering stocks. Today, I decided to scout one of the most popular Nasdaq index listed stock, Tesla:TSLA, whose current value at the time of writing this article is hovering above $700 a share. Almost every traders and investors know how hot Tesla can be, maybe one of the most heavily traded stocks in the world? Backed up of course by social media sentiment king, Elon Musk. He’s one of the sole reasons that meme crypto Dogecoin mooned hard last year! Crazily through the power of his Twitter posts! Memories of that event are still fresh inside my mind! It caught the attention of the entire crypto markets and resulted chain of reactions, back and forth. I cannot forget it almost hit $0.75 which many hyped coin supporters believed it will pump to a whole dollar at least! But the following day, buying pressure slowed down dramatically correcting the meme coin’s price real hard! And that’s the end of the show. Many top buyers of the coin surely shed their tears in dismay. That was really crazy days back then!
I do hope that at least I give a short history exposing Tesla CEO and co-founder Elon Musk’s influences over the market sentiment that might affect the stock itself. In fact on-going disputes between him and Twitter. As usual, I will disregard the rumors, gossips, news, and market sentiments. Whatsoever! I really believe in this phrase here, “show me the news and I show you the charts.” I rely always on charts lately and do my own way of exploiting technicals.
The trendy US dollar index has started the week bearish. Who knows that the DXY’s uptrend has concluded already or this might be mere pullbacks before next major moves higher! After reaching back its 20-year high levels since October 2002, it slowed down Thursday last week. Financial market rivals capitalized from Greenback’s recent retreat. Other major currencies including the cryptocurrency and stock markets reacted positively from this. Can markets be correlated to each other? One way or another?
So much for my fundamentals, let us now move on with my technical analysis for Tesla. I do see that the stock is trapped in a choppy weekly range bound trading. The 29-week old demand is still a viable threat. When I see this kind of trade setup, based on my experiences, there can be highly volatile price movements creating swing highs and lows. Re-testing both the upper and lower bounds. Remember, USD DXY index is still in a bullish month! Tesla has shed more than 50% of its most value and in a strong down-ward trend for 8 consecutive months like Bitcoin! This is what I meant about correlation earlier!
I also exploited lowering high channel in its 4-hour chart. I will short the rally attempts at $740 mark. A price breakdown lower from the weekly pivot level (in blue color) may trigger more selling pressures and for sure bears re-test the lower boundary of this choppy range. It will be good for me to take profit at $650. I think it will be safe to put the stop loss on $795 near the probable fresh swing high area above the weekly resistance level I put in the chart. A total risk:reward ratio of 1.63-64. Not a bad trade plan is it?