TSLA: "In hindsight it was inevitable"
Updated
Some of my trading friends on social media thought I was crazy to short Tesla 
TSLA in February after the January 2023 rally. To me it was obvious. There was a confluence of 50% Retracement Levels that I absolutely had to take a short. When you have a large trend ALWAYS mark the 50%. Take off the other Fibonaccis as they will confuse you. Once you study the 50% (and finish this article) I believe you will understand.
I have fully internalized the lessons of "Trading in the Zone" in that "Anything Can Happen" but... it was going to get to 160 no question in my mind. Let's talk about why/how to me it was obvious by using simple price action analysis. My goal is to teach readers how to use this tool and how it is so powerful.
History Lesson
The most important price action in this story is the BIG rally from the 2019 lows. In case you were not trading nor reading the financial news at the time... nearly every "expert" was talking about how Tesla was soon to go bankrupt. Billions of dollars were put into shorts, Long Puts and Short Calls betting on what was a very crowded narrative trade at the time. It make lots of sense... their balance sheet was abysmal. What no one realized nor took into account was the tax credits Tesla was selling to other car manufacturers. That saved the company and as things looked bright for Tesla the shorts got absolutely crushed. Then as the post-pandemic trading craze got underway the new narrative was that Electric Vehicles were going to replace all gas powered. That narrative (as all do) blew off in November 2021 and setup the all time high.
What this did from a price action perspective was setup the 50% Retracement Level 213.38 (split adjusted). This was going to be the level to hold to continue the bull trend.
That level did in fact hold and setup a double bottom in mid 2022 confirming its existence and validity.
The Narrative Fails
2022 was not a bull market. The 0% Interest rate world that fueled growth was not to continue. The level was broken. Tesla entered what I call "The Valley of Risk". This is when an instrument breaks its trend 50% and there are no more valid supports to hold nor reverse it. You never know where the bottom will be.
Hope is Kindled
Eventually Tesla bottomed and benefited from the January 2023 broad market rally and secular theme of AI. It returned to the level that had been support before. At this point traders should look for a level which was confirmed as prior Support to become Resistance.
The Trend is your Friend Until...
Additionally, the bear trend that led to the bottom setup its own 50% Retracement Level. When BOTH line up you have a POWERFUL level. It was at this point "I had to short" despite the questions and protestations of those that were enjoying the gains of a +100% rally. It's hard to step off those good times and see what was obvious.
And Now...
Just as in each step before the target for the short was the 50% Retracement of the 2023 Rally. Now, I am out of my shorts. I will be looking for longs off this level continuing to play this one simple tool of price action.
Trade wisely!
TSLA in February after the January 2023 rally. To me it was obvious. There was a confluence of 50% Retracement Levels that I absolutely had to take a short. When you have a large trend ALWAYS mark the 50%. Take off the other Fibonaccis as they will confuse you. Once you study the 50% (and finish this article) I believe you will understand.I have fully internalized the lessons of "Trading in the Zone" in that "Anything Can Happen" but... it was going to get to 160 no question in my mind. Let's talk about why/how to me it was obvious by using simple price action analysis. My goal is to teach readers how to use this tool and how it is so powerful.
History Lesson
The most important price action in this story is the BIG rally from the 2019 lows. In case you were not trading nor reading the financial news at the time... nearly every "expert" was talking about how Tesla was soon to go bankrupt. Billions of dollars were put into shorts, Long Puts and Short Calls betting on what was a very crowded narrative trade at the time. It make lots of sense... their balance sheet was abysmal. What no one realized nor took into account was the tax credits Tesla was selling to other car manufacturers. That saved the company and as things looked bright for Tesla the shorts got absolutely crushed. Then as the post-pandemic trading craze got underway the new narrative was that Electric Vehicles were going to replace all gas powered. That narrative (as all do) blew off in November 2021 and setup the all time high.
What this did from a price action perspective was setup the 50% Retracement Level 213.38 (split adjusted). This was going to be the level to hold to continue the bull trend.
That level did in fact hold and setup a double bottom in mid 2022 confirming its existence and validity.
The Narrative Fails
2022 was not a bull market. The 0% Interest rate world that fueled growth was not to continue. The level was broken. Tesla entered what I call "The Valley of Risk". This is when an instrument breaks its trend 50% and there are no more valid supports to hold nor reverse it. You never know where the bottom will be.
Hope is Kindled
Eventually Tesla bottomed and benefited from the January 2023 broad market rally and secular theme of AI. It returned to the level that had been support before. At this point traders should look for a level which was confirmed as prior Support to become Resistance.
The Trend is your Friend Until...
Additionally, the bear trend that led to the bottom setup its own 50% Retracement Level. When BOTH line up you have a POWERFUL level. It was at this point "I had to short" despite the questions and protestations of those that were enjoying the gains of a +100% rally. It's hard to step off those good times and see what was obvious.
And Now...
Just as in each step before the target for the short was the 50% Retracement of the 2023 Rally. Now, I am out of my shorts. I will be looking for longs off this level continuing to play this one simple tool of price action.
Trade wisely!
Trade active
UPDATE:A reversal setup has finally occurred... on the 15m a spike this morning developed at the open which sets up a breakout level. Breaking the high of the open also signals an Ichimoku trend reversal. This fits my rules for a Spike Breakout.
Stop level is below the low with a look to retest the Retracement of 180.
"Be to others the person you needed to meet 10 years ago"
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Discord Trading Community: discord.gg/eDfhKvS5AC
Youtube: youtube.com/c/NoroksNotepad
Twitter: twitter.com/noroktrade
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