Tesla Key Levels to Watch After a White Knuckle Week

With a couple minutes left until the close, TSLA has spent the entire day consolidating within the roughly 5% range it carved out during the first hour of trade.

In any other week, this sentence wouldn’t be particularly noteworthy. After all, Elon Musk’s newly-profitable electronic car company has always traded more on sentiment and expectations than traditional fundamental measures, leading to its relatively volatile stock price. However, today’s price action is remarkable for a different reason: TSLA has seen a surprisingly small range today relative to this week’s incredible volatility.

As we noted earlier this week, Tesla’s surge evoked a number of astonishing statistics, but the fact that a company with a nearly $100B market capitalization nearly doubled in less than two weeks, as we saw at Tuesday’s intraday peak, may take the cake. Looking at the chart below, the bloom came off the bullish rose in the latter half of the week, with the stock falling from nearly $1,000 down to its current level in the mid-$700s:

Source: TradingView, GAIN Capital

So what’s the outlook for arguably the biggest short squeeze of all time heading into next week?

As many traders learned this week, it’s impossible to say definitively, but the recent drop does mark a change in the character of stock, which had previously not seen even a 5% peak-to-trough drawdown on a closing basis in nearly two months. For that reason alone, it’s reasonable to assume that the proverbial bullish fever has broken and that the odds favor a continued pullback toward $500-$600 in the coming week. More aggressive bears may want to consider short positions near current levels, while those who are less convinced may prefer to wait for a move below Wednesday’s low at $687 to signal that a deeper pullback is at hand.

That said, the fact that Tesla has held up relatively well over the past couple of days leaves the door open for another leg higher. On a short-term basis, bullish traders will be watching for a potential break above Thursday’s high at $795 to signal that the buyers are attempting a last gasp push higher, with the potential to retest Tuesday’s high at $968 or even break into 4-digit territory above $1,000 as the final shorts are squeezed.

One way or another, Tesla’s massive rally over the previous week (and previous months) should offer trading opportunities for nimble intraday traders – just make sure you’re not asleep at the wheel!

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor