TESLA Stock - TSLA Drops Further! Whats Next??

Summary

In this Tesla stock update, the speaker analyzes recent market performance, highlighting a 3.5% drop to $332.25. They discuss key technical indicators such as broken support levels, bearish divergence, and a forming head and shoulders pattern, suggesting potential further downside to the $300 range. Despite the bearish outlook, there are signs of possible short-term stabilization due to a bullish divergence on the 1-hour chart. The speaker's strategy involves selling puts and awaiting better confirmation before entering long positions. The overall focus is on the descending trendline, with the potential for a market bounce if it breaks out above key levels.

Takeaways

• 📉 Tesla stock closed down 3.5%, finishing at $332.5, raising concerns about its short-term future.
• 🔄 Despite the downturn, there are expectations of potential short-term bounces, especially in the coming days.
• 📊 Breaking the key support level at $332 is a significant move, suggesting possible further declines unless Tesla can regain ground.
• 💥 A head and shoulders pattern is forming, signaling bearish momentum, with a possible price target around $300 per share.
• 📉 The 15-minute chart shows Tesla repeatedly failing to bounce after breaking key support levels, turning those areas into resistance.
• 🔴 The MACD is nearing a bearish crossover, signaling that the downward momentum may continue in the near term.
• 📅 A bullish divergence on the 1-hour chart indicates some stabilization, but further downside remains likely until key resistance levels are breached.
• 🕐 Short-term consolidation could occur before potential further declines if Tesla fails to reclaim $336 or break its descending trendline.
• 🚨 The risk/reward ratio at current levels isn't favorable for buying, with more optimal buying opportunities seen at lower levels around $300.
• 💰 Selling puts is a current strategy to profit from sideways movement or a slight decline, rather than buying stock at this uncertain time.
• 📉 The descending channel on the 1-hour chart is the main focus for technical analysis; Tesla will likely remain in this channel until a breakout occurs.

Q & A

What is the current status of Tesla stock according to the video?

Tesla stock has recently dropped by 3.5%, closing at $332.5. Despite this decline, the speaker anticipates potential bounces in the near future, although there are concerns about longer-term momentum.

What are the short-term expectations for Tesla stock movement?

In the short term, the speaker expects potential bounces or consolidation at certain levels, with a focus on the 332 to 336 price range. However, there is caution regarding the loss of key support levels.

What is the significance of the 332 to 336 price range for Tesla stock?

The 332 to 336 range was previously a support level, but after breaking below it, this area is now seen as resistance. The stock's ability to reclaim this range could signal potential reversal or continuation of the downward trend.

What is the 'head and shoulders' pattern mentioned in the video?

The 'head and shoulders' pattern is a technical analysis formation that suggests a potential reversal in price direction. In this case, the pattern indicates that Tesla stock could drop further, with a target of around $300 per share if the pattern plays out.

What does the speaker think of the current market for Tesla stock?

The speaker expresses a cautious outlook for Tesla stock. They mention a bearish divergence and several technical factors, such as losing key support levels, which indicate a potential for further decline.

What is the significance of the 21-day exponential moving average (EMA) for Tesla stock?

The 21-day EMA is currently providing some support for Tesla stock. However, the speaker notes that the MACD indicator is showing signs of crossing bearish, which could suggest further downward pressure if the support fails.

What is the descending channel pattern discussed in the video?

The descending channel pattern is a technical formation where the stock price moves between downward sloping trendlines. The speaker believes that until Tesla breaks out of this channel, the stock is likely to continue declining, potentially reaching around $300.

Why is the speaker currently selling options on Tesla stock?

The speaker is selling puts on Tesla because they do not find the current price attractive for buying. They prefer to wait for a better risk-reward setup, such as a confirmation of a price move above 336 or a break above the descending channel trendline.

What was the notable options flow mentioned in the video?

Towards the end of the trading day, a significant options order was placed for 500k worth of 340 strike calls expiring on July 11th. This suggests a potential bullish bet on Tesla's short-term recovery.

What does the speaker suggest as a potential strategy for traders regarding Tesla stock?

The speaker suggests that traders focus on the descending channel as the primary indicator for Tesla's price movement. They recommend selling puts or waiting for the price to either break out of the descending trendline or show stronger signs of recovery before entering long positions.