The charts show Tesla shares could be on the verge of a big swing, Katie Stockton says
The chart of Tesla Inc. (TSLA) shows uncertainty on the part of investors, with fickle price action keeping the stock tethered to its 200-day moving average (MA). Following April’s recovery, the stock entered a consolidation phase characterized by volatile swings within a tightening range. This has resulted in a triangle pattern, with TSLA now approaching the lower boundary of that formation near $295. Weakened short-term momentum has characterized the recent downdraft into this support level, which is bolstered by the daily cloud model (shaded area on the chart). However, short-term oversold conditions may help prevent a breakdown. From a longer-term perspective, TSLA remains below resistance from the weekly cloud model, and the weekly MACD is pinched in a reflection of weakened intermediate-term momentum. A crossover would imply downside follow-through, noting also the weekly stochastics are trending lower with room to oversold levels, supporting a breakdown below triangle support. Currently, the weekly cloud model puts initial resistance near $314, and the triangle’s upper boundary is near $330. It would be good to see TSLA reclaim these levels. If a triangle breakdown occurs (below $295), secondary support is approximately $273 based on a Fibonacci retracement level. With applications beyond TSLA, we would note that triangle patterns often precede significant directional moves, and breakouts (either up or down) tend to result in immediate follow-through. With this in mind, we would monitor the pattern’s boundaries closely. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. 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