Tesla’s stock price is trading close to a seven-week high today as a huge technical breakout in Bitcoin yesterday is starting to prompt traders to take another look at the upside prospects of the electric car maker.
Bitcoin surged above the $64,000 level today and hit a new all-time high after breaking above the $61,800 level yesterday. Optimism towards the Coinbase IPO and Nasdaq listing is causing a massive a major price surge in the cryptocurrency market.
Tesla announced last month that they are going to allow Tesla cars to be purchased in Bitcoins, which could mean that the ongoing breakout in Bitcoin will be attractive for Bitcoin owners, who have amassed huge profits, and could hypothetically spend their Bitcoin profits on Tesla cars.
Another bullish catalyst for Tesla is the fact that the company invested $1.5 billion in Bitcoin earlier this year. Tesla bought Bitcoin at an average price of $37,500, which means that Tesla have already made a profit of nearly $1 billion since it invested in Bitcoin.
Therefore, as Bitcoin continues to rise on the cryptocurrency market it should be extremely bullish for Tesla’s share price. The options market already has many bullish bets stacked at $70,000 and also $80,000 by the month end.
Bitcoin has been in a period of price consolidation over recent weeks, while the so-called “alt season” got underway. Now that Bitcoin is breaking out to the upside again it could be the start if the next major bull run.
The fundamentals for Tesla are also improving, as the global economy starts to come out of lockdown, and consumption should increase in the automobile industry, due to increase job creation, and the need for travel.
Tesla Short-term Technical Analysis
The four-hour time frame shows that Tesla’s stock price has moved back inside a large broadening wedge pattern, following a confirmed move above the $650.00 level.
If the rally continues the Tesla’s share price could move towards the $1,000 resistance level. The overall size of the wedge pattern is predicting that Tesla’s share price could eventually advance towards the $1,300 level.
Tesla Medium-term Technical Analysis
According to the daily time frame Tesla’s share price could be preparing to stage a massive price rally towards its all-time record high and form a bullish inverted head and shoulders pattern.
Technical analysis shows that the potential inverted head and shoulders pattern is warning that Tesla’s share price could rally towards the $1,400 level.
In the near-term, gains above the $700.00 level should be seen as bullish over the medium-term horizon for Tesla’s share price.