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Tesla shares extended drop by -0.6% pre-trading on Wednesday following a major plunge of -5.25% on Tuesday. Investors are closely watching the Fed meeting minutes due for release later in the New York session. The minutes will guide investors on the policy as further tightening could strengthen the dollar which is negative for Tesla in the near term. Markets have been pricing a pause from the Fed as inflation softens.
The Dollar index was up by +0.28% as bulls continued to trade near a 6-week high boosted by stronger economic data. The US composite PMI came in at 50.2 vs 47.5, while the services PMI came in at 50.5 vs 47.2. The US dollar rose modestly towards the 105.20 level after bouncing off the 101.00 level and a break above that near-term resistance could give bulls the 108.00 level.
However, Tesla’s takeover of Sigma Lithium would help boost its profits and production capacity. The potential bid of a $3 billion acquisition by the EV giant could lift investor sentiment in the near term. Securing the Lithium supply could hedge investor profits amid rising commodity prices.
Investors shift their attention to March 1 as they prepare for major announcements from Tesla. The Master Plan could address the expansion of its in-house cell production, the company’s manufacturing footprint, capital allocation, and growth of energy storage. Moreso, the upcoming US GDP data and PCE data could affect dollar performance and bring volatility to the stock market.
Weekly Chart Analysis
Tesla trimmed gains for the first time, following a 6-week rally. The stock shows signs of recovery as MACD indicator volume bars broke above the 0.000 benchmark suggesting bullish dominance in the near term. Moreso, the break above the 195.00 level, which coincides with a Bollinger Band baseline suggests bulls could push further up towards the 313.300 level. On the downside, bulls should defend the 180.00 level should we expect to see price trade higher.
However, Tesla is currently capped by a falling channel suggesting downside pressure as the stock makes a corrective wave pattern. A failure to break above the 225 level, coinciding with a falling trendline could cause further selling pressure as short-term selling may expect near-term price pullback. A break below the 180.00 level could invalidate the bullish outlook and bears could seek to retest the 100.80 level.
Daily Chart Analysis
Tesla shares experienced a plunged from a 3-month high, a previous support turned resistance. The stock experienced parabolic gains from a 103.80 low and upside gains remain capped by the 210.00 level, a 3-month high. The RSI indicator reading is currently down from the 75.00 region suggesting the stock was trading at an overbought zone. Tesla could experience a near-term correction towards the 155.00 level which coincides with a 50-day moving average, a dynamic support level.
However, a break above the 210.00 level could reinforce the bullish recovery and the next key target could be 313.300 level, a 10-month high. A hold above the 155.00 would be critical for bulls to defend outlook and the 200-day moving average remains a key resistance level is the near term.
