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Tesla’s stock price has recovered by nearly 20 percent from the March 5th low, just above $500.00, as demand for technology and green energy stocks starts to increase after the brutal early-month pullback in the S&P 500 and the Nasdaq.
It is noteworthy that Tesla traders shrugged-off the early-week pullback in Bitcoin, where the top cryptocurrency dropped by nearly $9,000 from its new all-time trading high, around the $61,500 level.
Tesla and Bitcoin had an increased price correlation last month, after the CEO Elon Musk announced a massive $1.5 billion bet on Bitcoin. Traders could be encouraged that Bitcoin is still well above Tesla entry price into Bitcoin, which is reported to be around $38,000.
Tesla has also had some increasingly positive fundamental developments recently. The world’s largest electric motor car maker has recently increased the price of certain Tesla models, which is a sign of confidence, and would also help to improve Tesla’s bottom line and strive for profitability.
Additionally, a foray into emerging markets, such as China, is set to boost the revenue generation for the company this year, and significantly increase demand for Tesla cars. Tesla also benefits from being an environmentally friendly automobile company, which is fitting with the Biden administrations green agenda.
A potential boon for Tesla in the short-term could be US stimulus. It is expected that a number of US citizens will invest a portion of their $1,400 stimulus into US technology stocks or Bitcoin. Therefore, Tesla could benefit from rampant retail speculation, and indirectly if citizens invest in Bitcoin in large numbers.
Something else to note and be mindful of as a potential headwind for Tesla, is sentiment towards the Nasdaq. Nearly 77 percent of traders are bullish towards tech stocks at the moment. The complacency towards tech stocks recovering should not be underestimated, especially the notion that the Nasdaq and the S&P 500 will rise at any cost.
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. A number of rejections have taken place from the bottom of the wedge during the recent recovery.
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Traders should expect Tesla’s stock price to pick-up bullish momentum if the price moves back inside this key broadening wedge pattern. Failure to achieve this goal and Tesla’s stock price could receiving a hammering back towards the $630.00 to $600.00 support zone.
Tesla Medium-term Technical Analysis
According to the daily time frame Tesla’s stock price is trading at a critical juncture and is very much trading at a crossroads. Two possible scenarios exist for Tesla at this stage.
Traders should note that a bearish head and shoulders pattern with a $400.00 downside projection will be activated if the price tumbled below the $500.00 level.
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Alternatively, a reversal back towards the $900.00 resistance level will help to form a huge bullish reversal pattern, which holds an eventual upside target of $1,400.
