TSLA: Pay Close Attention to These Chart Patterns (D & W charts)Today we see an important move in TSLA's share price, a break of the resistance level of its previous top at $252.75.
Now, after the breakout, we see that this area is serving as intraday support, which is in line with the principle of polarity (former supports can become future resistances and vice versa).
Since our last analysis last week, we see that the price has broken through its most important resistances, which we mentioned in our previous analysis, and is committed to a clear uptrend. The link to the latest study is below this post, as always. What’s more, after our analysis, TSLA performed a clear “Hammer” candlestick pattern above its support line, as evidenced on the chart above. According to Bulkowski’s studies, a Hammer acts as a bullish reversal roughly 60% of the time (Encyclopedia of Candlestick Charts, chapter 40: Hammer, p. 348).
What's even more interesting is that the price has thwarted a possible reversal pattern called Head and Shoulders, as we can see in detail in the chart below. By not triggering the neckline by closing a candle below $230, and reacting to the point of breaking through the top of the head, TSLA has completely rejected any bearish thesis.
Another important point that reinforces the bullish sentiment is the breaking of an important resistance on the weekly chart, breaking a bearish channel, frustrating the price's downward sequence and triggering a bullish reversal for the long term. As we see in the image below, such a pattern could be interpreted as a Bullish Flag as well.
Now, TSLA shares could reverse the long-term trend and finally turn bullish. Could it follow the example of the Nasdaq index, which made a similar pattern recently, also on the weekly chart?
QQQ chart:
It's a plausible move with a good technical basis, but as always, we need to be aware of a few risk points.
Firstly, if the price loses a lot of strength, to the point of making a bearish pattern on the weekly, closing below the resistance of the bearish channel, the bullish thesis loses strength.
Secondly, if a reversal pattern is observed on the daily, and the price loses its supports, we have a rejection of the uptrend in the medium term. Especially if the 21 EMA is lost. Although the price has breached the average a few times, at no time since November 10 have we seen a close below the 21 EMA on the daily chart. If this happens, the bullish thesis described in the analysis could be thwarted.
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Best regards,
Nathan.
