Tesla Stock News and Forecast: TSLA shares set to rally

  • Tesla falls to the first point of support.
  • TSLA should bounce on Tuesday as markets recover.
  • Tesla stock still looking overvalued as the sector rerates.

A more or less normal day on Monday took place after the sharp sell-off on Friday. Monday’s performance was somewhat better than expected or less bad than many feared. Equity markets held up relatively well with the main indices losing less than 1%. Fears of capitulation were short-lived. This should set up a recovery rally for Tuesday and Wednesday and then probably markets will flatline ahead of Friday’s employment report.

Tesla stock news

The good news for bulls was that Monday’s price action opened on the lows at $280, retested it in the first half, and then put in place a double bottom on an intraday basis that set Tesla (TSLA) stock higher for the remainder of the session. Overall, it was a pretty boring day. Tesla had a range of about $7 on the day, but there was no follow-through from Friday’s sell-off. Is this consolidation just a holding pattern before further falls or base building for a recovery?

Tesla stock forecast

The longer-term view remains bearish with the series of lower tops identified by our trendl ine below. As we can see, Tesla is stuck in a high-volume area (grey bars on the right). High volume areas are stabilization zones, and markets tend to move from one to another. Below $281 and above $314, volume thins out, so we would expect Tesla to move quickly through those zones. The recent hawkish commentary from Powell puts the risk-reward in favor of the downside in my view, so I would be looking for a break of $281 and a swift move through light volume until we reach the next high volume zone at $240. However, ahead of Friday there is likely to be some recovery and then stabilization around $300.

TSLA 1-day chart

The author is short Tesla.

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