TSLA: Low volume/low volatility... What to expect next?

2020년 11월 16일

Hello traders and investors! Let’s see how Tesla is doing today. It’s been some time since my last analysis, so, let me give you guys some updates. And the link to my previous analysis is below, as usual.

First, Tesla is trapped inside what I like to call a Trap Zone, trading above the support at $ 406, but under the resistance at the 21 ema, and the price could breakout to any direction from here.

The support at $ 406 is strong, but Tesla is coming from a clear short-term bear trend. We had a Bullish Engulfing candlestick pattern on Friday, which was a good entry point, but the 21 ema is stronger than we expected. If Tesla loses the Engulfing’s low, there will be no clear support levels until it hits the $ 379 again.

Let’s see the daily chart for more clues:



Tesla is inside a congestion, and here you can see clearly why I said that if it loses the blue line, the next stop would be the $ 379 (previous bottom). The volatility decreased a lot, and the volume is extremely low as well. In this circumstance, it is normal for a stock to do small candlesticks.

The 21 ema is flat, meaning we have no clear trend, and the yellow area down there is a possible buy zone, which we can see better in the weekly chart:



By looking at this chart, Tesla doesn’t look so bad, right? The long-term trend is clearly bullish, and it seems it is just retesting again the 21 ema in the weekly chart.

The yellow area is a triple support level, made by the purple and pink lines, along with the 21 ema. The low volume is acceptable during pullbacks in a bull trend, according to the Dow Theory, and this doesn’t change the fact that the trend is still bullish.

But Tesla must do a reaction with good volume to resume the bullish momentum, otherwise, it’ll just keep trading erratically for some time.

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Have a great day.