Whether we like it or not, $TSLA was in a bubble. And whether you think the Green Energy movement has a future or not, the stock is simply way overpriced.
And when we zoom out, the sideways trading range it’s been in for two years (!) doesn’t look good, because a range like that can only mean one of two things:
- It’s a long re-accumulation prior to another markup
- Or it’s a distribution
But in an inflationary recessionary tightish monetary policy era, just how high do you think it can go? Nah, I think it’s far more likely had its day and will come back down to earth.
And scarily, there is very little volume on the way down:
By poking below its long trading range, we like to call that a “sign of weakness” in Wyckoff vocubulary, and more of that is likely to come. And when it does come, it may fall terribly, to the $50 range, and possibly even lower where there is some volume that can support it (I have noted those two place in the chart above).
Now if we zoom in, let’s see what we can see in the shorter term. Just because it’s just shown us a sign of weakness by breaching its trading range, doesn’t mean it has to fall straight down right this second (it might).
But, locally, finding initial support at the bottom of this range might be productive in the short term. And it looks to me like 3-wave sequence is ending (the Green A-B-C). This may produce a rally that can retest the 50-61.8% retracement of the decline (the orange box), and possibly try to fill a prior gap (the green arrow):
But, after that—if we even get this—I think the long-term picture is very bleak (for Tesla bulls at least). But if you love it, and you think it has a promising future, then you’ll be able to buy a lot of it if it falls to $50 (and probably lower).
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