Short

Updated

TSLA - Fast and Furious Race to Bottom

Tesla (TSLA) was printing Wyckoff distribution pattern for a while now. Almost 2 years. And it is finally entering its last phase with downward trending Last Points of Supply (LPSY). The break of pink TL on a chart, followed by break of ICE has a very high probability which gives us an opportunity to SHORT Tesla.

This is a long term trade but promising very good returns.

The drop should be very fast in a panic mode once ICE is broken. I would advise to create a good short position above ICE arc and hold short position until panic selling happens and finds some support.

Confirmation for this trade will be a break of ICE arc.

Note

News: "SEC Asks Judge to Hold Elon Musk in Contempt: Report"
"Tesla shares fell 5% to $284 in after hours trading following the report."

We know it is not the news that will cause TSLA drop. Distribution is coming to end...

Watching trend line closely.

Note

Tesla stock is weak. We can identify today a perfect hanging man candlestick pattern. Weekly candle is also weak. Waiting for weekly close.

Note

We are currently at the level where we should make and babysit our short entry. Although, some brave trades could use this perfect daily hanging man to enter. In any case the move down will be BIG as shown on the chart. Patience is your friend during this trade - don't exit early.

Trade active

Note

Anticipating a STEEP DECLINE for Tesla stock following weeks for the the reasons below:
1) Price closed the week below our pink TL after failed attempt to bounce from it.
2) 50SMA bearish crossed 200SMA
3) Wyckoff distribution pattern has matured and in its latest stage - "Markdown".
4) Last 3 daily candlesticks formed a bearish pattern.
5) We may be witnessing early stage of BARR pattern - "Lead In" phase which is finished. We can see from last 2 tops that decline speeds up entering a Bump phase. Potentially...

Note

Weekly close was weak today. Price broke down weekly 200SMA (Simple Moving Average) on Monday and tried to comeback mid-week but got rejected on Friday and closed significantly lower.

Note

$286-$293 price range is a good place to enter short - TL re-test. And another chance get out of long trade if somebody holding it.

Note

I think this was last supply check of Wyckoff pattern. On logarithmic scale scale we can clearly see down trend tested second time yesterday and rejected today.

Next is markdown phase of Wyckoff pattern, so drop should speed up. Watching closely $245 price area where ICE is.

Note

Wyckoff ICE support line got broken today. Mark down phase of Wyckoff distribution has started. Weak holder who bought during this lengthy distribution will sell in panic. Next is just wait until price drops to our targets.

Note

This week TSLA entered “Panic” phase of market cycle. Do not try to catch knife here. Too risky.

Note

I would like to share a longer term view on TSLA shares. At this point it almost doesn’t matter what the company does because stock market forces have engaged. Huge number of “weak hands” holders are under water and begging for price to come back above 250 to SELL their positions. But most likely it will not happen so it is just a matter of time before they throw the towel and sell at huge loss more than 50%.

Distribution phase took more than 2 years during which, I believe, “big institutions” got rid of the stock. If Tesla manages to survive as a company the accumulation phase should take comparable time allowing short sellers to take profit and make long position. Therefore INVESTMENT into TSLA is a BIG No-No until we see a bottoming pattern that lasts at least a year. Most likely it will take more time. Short term TRADING bounces is possible but risky.

Hard to predict right now at what price bottoming will happen, so have to wait for the pattern to go long.

Hopefully you followed this idea from the beginning and managed to get out of stock on time.

Note

I don't trust this spike. Most likely it is quick initial profit taking from shorts. Fade it. We will see and test $178 support again as I explained in comments below.

Note

TSLA is a very popular stock, therefore market physiology should perfectly work. I have applied market cycle phases to it to see where we are in the cycle for LONG TERM price action projection. One may argue if it was ANEXIETY or PANIC phase we just witnessed. I picked ANEXIETY and we entered into DENIAL phase with this bounce.

This rally may go higher but my advise is - SELL this rally. It is too early for investment. Short term trading is different.

Note

Just to reiterate. It doesn't matter now what Elon Mask says or what company does or what quarterly report will be. Every positive real or fake news will be faded by market participants - stock will still drop and go through accumulation phase before taking off up again. Only when accumulation pattern shows up we should consider buying TSLA - and that will take time and will require patience from investors.

Note

TSLA is showing weakness last couple days and I think it is good to start re-shorting it here.

Note

Added to short at 1240 at the opening.

Note

Update on where TSLA is in market cycle. TSLA is not good for investment for foreseeable future. I can see Wyckoff ICE line rejecting. Next drop if happens will break last low.

pbartashevich

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.