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Tesla’s share price suffered heavy losses on the Nasdaq on Monday as the world’s largest electric automobile maker got hit with a trifecta of negative fundamental developments.
Firstly, nervousness about the Chinese EV rival Li Auto caused a big chain reaction in the electric automobile sector. Li Auto saw its stock tumble after it announced a reduced outlook for the third quarter.
Li Auto noted that its guidance now needed to be lightened due to an economic slowdown in China, with the company expecting deliveries of 24,500, a big down revision from 26,000 previously.
Secondly, Tesla got the news that the U.S. National Transportation Safety Board would open an investigation into a fatal crash earlier this month involving a Tesla vehicle in Florida that led to the deaths of two people, including the driver and a resident of the home into which the vehicle crashed.
Thirdly, the Chinese Evergrande situation cause widespread bearish momentum across stock markets, making it very difficult for Tesla’s price to stage a meaningful recovery with such pessimistic market sentiment.
To a lesser degree Tesla also suffered from a massive double-digit price drop in Bitcoin. The top cryptocurrency suffered a price plunge of over $7,000, as traders liquidated some of their crypto holding.
Tesla has huge Bitcoin holding, and as such, big price plunges tend to have a negative effect on the electric automobile makers stock price. Furthermore, Tesla has also recently announced that clients can purchase Tesla’s in Bitcoin.
For the record, last year Tesla bought massive amount of Bitcoin around the $37,000 level on average, meaning that a current prices, Tesla’s BTC holdings are still in profit.
Tesla Short-term Technical Analysis
According to the four-hour time frame Tesla’s stock price has formed an inverted head and shoulders pattern, with bulls narrowing defending the head of the pattern to stop it being invalidated.
A potential push towards the $760.00 area is now required to activate the bullish pattern, with bulls needing to continue to defend the $700.00 support zone to stop a drop towards the $650.00 level.
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Tesla Medium-term Technical Analysis
According to the daily time frame Tesla’s stock price is still undergoing a bullish breakout from a large descending triangle pattern. The breakout continues to hold despite the recent loss of upside momentum above the triangle.
If the broader stock market recovers again I suspect Tesla will head back towards the $800,00 level. The caveat here is that Tesla’s price is very much dependant on COVID-19, the USA and China, and how investors take the debt ceiling and the Chinese Evergrande situation.
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