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Tesla’s stock price has started to come under pressure again, after bulls failed to stage a breakout about key technical resistance and a strong sell-off in the cryptocurrency market, just hours after a major announcement from Tesla.
Yesterday, Elon Musk announced to market participants that Tesla products are now available for purchase through the world’s number one cryptocurrency, Bitcoin. Tesla had already alluded to this in February.
The largest electric-car maker in the United States first announced a $1.5 billion investment into Bitcoin last month, following numerous cryptic Tweets from Musk, who has been propend of cryptos such as Bitcoin and Dogecoin for some time.
Musk said “Tesla is using only internal and open-source software and operates Bitcoin nodes directly. Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency”. This essential that Tesla is not planning to convert Bitcoin in the US dollar.
Many analysts speculated that this was a sign of the times, as largest and trendy new companies are now favouring Bitcoin instead of fiat currency. It should be noted that Bitcoin still has a limited number of outlets where it can be spent.
Yesterday, FED Chair Jerome Powell took a decidedly dovish tilt towards Bitcoin. The FED Chair said, “Crypto assets are highly volatile, see Bitcoin, and therefore not very useful as a store of value, and they’re not backed by anything”.
Bitcoin sold-off on the bearish comments from Chair Powell, as did Tesla. It should be noted that the price of Tesla is starting to show an increasing negative price correlation with Tesla. Therefore, bearish correction in Bitcoin is likely to harm the overall stock price of Tesla.
Traders and investors are therefore closely charting Bitcoin for clues as to where the price of Tesla may go. If we look at the chart of Tesla now, the short-term prospects of the electric-car maker do not look good right now.
Tesla Short-term Technical Analysis
The four-hour time frame shows that Tesla’s stock price has risen back to a key former breakout area from a large broadening wedge pattern and severed a big technical rejection.
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Repeated failure around this this key broadening wedge pattern now sets up a test of $500.00 and possibly lower. The overall size of the wedge pattern is predicting that Tesla’s share price could fall as low as $420.00.
Tesla Medium-term Technical Analysis
According to the daily time frame Tesla’s share price could be preparing to stage a massive price, as bears are now testing around the neckline of a large head and shoulders pattern.
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Technical analysis shows that the bearish head and shoulders pattern is warning of a potential $300.00 decline. Watch out for the bear party to get started if losses start to accelerate below the $600.00 level.
