On Thursday morning, Tesla, Inc. was trending on r/WallStreetBets after the EV company won approval to launch three more of its vehicles in the Indian market. Tesla also released a software update that advises drivers when their tires should be rotated by measuring the remaining tread.
The stock has been pressured recently by both a pullback in the general markets and CEO Elon Musk continuing to sell shares. Cathie Wood-led Ark Invest has been offloading its position in Tesla as well, selling 393,556 shares so far this month.
On Wednesday, Tesla came within $18 of completely filling a gap left behind on Oct. 25 between the $910 and $944.20 range but a bullish reaction to meeting minutes released by the Federal Reserve caused a reversal to the upside. What remains of the gap may not be filled for some time now, because the stock looks set for a larger move north even if only to print a higher low.
The Tesla Chart
Tesla has been trading in a downtrend since Nov. 22, making a consistent series of lower highs and lower lows on the daily chart. The stock’s most recent lower high was printed on Dec. 8 at the $1,072.38 level and the most recent lower low was created on Wednesday at $928.25.
On Wednesday, Tesla had higher-than-average volume, which indicates there is a high level of trader and investor interest in the stock. During the trading session, over 25 million shares exchanged hands compared to the 10-day average of 22.92 million.
When the markets opened on Thursday, Tesla gapped up almost 2 percent higher but ran into a group of sellers who caused the stock to trade lower and fill the gap. Because gaps fill about 90 percent of the time it is a positive sign if the stock can now find some dip buyers.
Tesla is trading slightly below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The stock is also trading below the 50-day simple moving average, which indicates longer-term sentiment is bearish. It is worth noting that Tesla can easily regain all three moving averages due to how close they are to its share price.
Bulls want to see sustained big bullish volume push Tesla up above the moving averages and toward a resistance level at $1,045. If the stock can regain the level as support, it has room to trade up toward the $1,075.02 mark.
Bears want to see big bearish volume come in and drop Tesla down below Wednesday’s low-of-day, which would confirm the downtrend is still intact. Below the area, the stock has support at $900.40 and $877.95.
By Melanie Schaffer
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