Tesla stock (TSLA) just broke above the previous 2021 highs on fresh headlines of a large order from the car-rental industry. Will traders see this as another buying opportunity or are sellers waiting the wings, ready to fade the pop?
Major Resistance Break on TSLA
We’ve got another one for you CFD and equity traders out there, this time on Tesla (TSLA) as the stock price just jump higher at this week’s open. The buying frenzy is being attributed to news of Hertz ordering 100,000 Teslas in an effort to move its fleet towards electric vehicles.
The bullishness is also likely a continuation of buyer jumping in after a strong round of catalysts for Tesla in October, including a strong earnings report released last week (highlighting record vehicle production and deliveries, net income and profit in Q3) and possibly on interest as a proxy for bitcoin given it holdings of 42,000 bitcoin and bitcoin‘s move to new all-time highs last week.
Whatever the case may be for the buying frenzy, it’s likely that with it being supported by positive narratives, odds are in favor of the bulls and that TSLA could reach the major psychological level of $1000 this week. The question then would be, “will we see profit taking and a slow down in momentum?”
If traders refocus back to the current chip shortage or Tesla’s relatively high valuation levels, it’s likely that could be the case as short-term traders may look to take profits at $1000. Also, TSLA has had a heck of a run higher after breaking above the descending triangle pattern spotted back in July, so it wouldn’t be surprising to see some longer-term profit takers come out of the woodwork. But any pullback would likely be looked at as a buying opportunity for longer-term players looking for fresh (or increased) exposure to Tesla’s car, solar, or utilities businesses, or the growing electric vehicle adoption story in general.
On the daily chart above, if we do see a pullback from today’s pop, the $900 level is the area to watch for a potential buying support. Of course, if that area does break and we do get fresh catalysts to push traders more negative on TSLA (e.g., increasing difficulty with chip shortages, consumer shift towards TSLA competitors, a sharp drop in bitcoin or global risk sentiment, etc.) then that could be the start of a deeper correction.
What do you guys think? Will traders take profits after a sudden move higher, or will there be more buyers this week looking for a momentum move?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.