Tesla (TSLA) shares bounced off support near the $275 level in trading on Monday. This area is the lower end of a one month channel, with pattern resistance located at the $310 level.
The stock price moved higher in morning but then steadily faded through the afternoon. The advance reached about the mid-point of the channel pattern range, with the high of the day failing just below the declining 50 day moving average. The close was situated at the lower end of the daily overall range, back down near the open.
Tesla’s price action formed a shooting star-like candle on the chart. This candle represents the inability of the stock to hold at higher levels and suggests further weakness.
Moving average convergence /divergence is making a bearish crossover, reflecting recent downside momentum, and the accumulation/distribution line crossed under its 21 period signal line, which confirms the recent shift in the direction of money flow.
Tesla’s price action and current technical indications are suggesting that despite Monday’s restrained upside price action, in the short term, a break below channel support is more likely than a break above channel resistance.
A channel breakdown projects a downside pattern price objective that is measured by taking the height of the channel and subtracting it from the support line. It targets a new low for the year in the $240 area or about 12% more downside, which would also be a 62% Fibonacci retracement of Tesla’s 2016 low and 2017 high range.