Technical Analysis – Tesla stock hovers in downward sloping channel above 23-month low

Melina Deltas, XM Investment Research Desk

Tesla’s stock price has been trading within a downward sloping channel over the last five months. Looking at the short-term momentum indicators, they paint a cautiously negative picture. The RSI seems headed for a test of its 30 zone, while the stochastic is heading south in the daily timeframe. The ‘death cross’ within the 50- and 200-day simple moving averages (SMAs) is still holding, suggesting more losses.

In case of another wave of declines in the market, sellers could encounter their first obstacle near the 23-month low of 230.55. A clear break below that zone may open the way for a test of the October 2016 inside swing top, at 215.00.

On the other hand, if buyers retake control though, resistance to advances may be found near the 258.00 territory before meeting the downtrend line of the channel, which stands near the 23.6% Fibonacci retracement level of the downleg from 379.00 to 230.55, near 265.60. A bullish violation would turn the focus to 280.00, switching the bearish outlook to neutral.

In brief, as long as price action remains in the descending channel the long-term outlook would be strongly bearish. In the short-term, only a break above the 23.6% Fibonacci can change the current view.