Technical Analysis – Tesla’s stock claims 1,000 first time ever; rally could soften in short-term

Christina Parthenidou, XM Investment Research Desk

Tesla’s stock recorded its best day of the year on Thursday as it managed to close slightly above 1,000 for the first time ever, re-activating its long-term uptrend above February’s all time high that preceded the virus-led crash.

Expectations are now for the stock to give up some ground as the rally looks to be overstretched according to the RSI which is slipping below its 70 overbought mark. Yet, buying confidence may not fade unless the price breaks below the ascending trendline drawn from the March bottom of 348.98, putting the upward pattern at risk.

A drop below the trendline, which is currently intersecting the 20-day SMA could take a breather near the 23.6% Fibonacci of the upleg from 348.98 to 1,025, at 866.14. A decisive close beneath that, could trigger a steeper decline until the 50-day SMA and the 38.2% Fibonacci of 767.31.

Otherwise, should the bulls surpass the 1,025 top, the next target could be the 1,100 psychological level.

In brief, Tesla’s rally may lose momentum in the short-term as the market looks to have reached overbought levels, though only a sustainable move below the supportive trendline could raise selling interest in the market.