Tesla Stock Still Has Plenty To Prove On The Charts

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What a tough year it’s been for Tesla (NASDAQ:TSLA). Unlike many stocks so far in 2019 or the overall markets in general, Tesla topped out in January and has been struggling ever since. While the Nasdaq is up 18.5% year to date, TSLA stock is down 35%. Is the move an overreaction or is the decline just getting started?

Tesla Stock Still Has Plenty To Prove On The Charts
Tesla Stock Still Has Plenty To Prove On The Charts

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Through the first quarter, it was tough run for Tesla. But the charts didn’t start to really break down until April. For years, Tesla bulls have seen shares rebound higher each time they test down into range support near $250 (we’ll get to the levels in a moment). When that support gave way though, a flood of selling hit the stock.

Lower-than-expected Q1 deliveries and no profitability suddenly sent investors into a panic. Will it continue or is TSLA stock set to stabilize?

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chart of TSLA stock
chart of TSLA stock

On the one-year daily chart above, only two marks really matter: range support and channel support.

Labeled “1” above, channel support had buoyed TSLA stock as it continued to trend lower. Channel resistance teamed with various moving averages to squeeze Tesla down. This downward channel took hold in December and was in play until May when the bottom finally fell out.

Lasting longer than the downtrend, though, was range support, marked on the chart with a blue box, it’s been in place for years. On the chart, you can see it give a lift to TSLA stock in Q3 and Q4 2018, as well as in March 2019.

Action in May, though, was the most telling (purple arrow). TSLA stock broke below range support and on the ensuing rebound, acted as resistance to the stock. That was alarming for longs and gave investors the only signal they really needed in Tesla stock at the time. InvestorPlace readers were prepared for that possibility and hopefully bulls were able to dodge plenty of heartache as a result.

So what now?

TSLA stock lost channel support, but reclaimed that mark this week. It also hurdled the 20-day moving average. Those are two bullish developments, but Tesla still has a long way to go before being a solid buy-the-dips candidate.

The real game changer could be the fall-out from yesterday’s shareholder meeting. Shares were up almost 2.5% in premarket trading at 6:15 a.m. EDT today.

As it looks like investors are seeing a positive takeaway, sending the shares higher. In this case, there are two levels to watch. First is the 50-day moving average at ~$237. Above that, and channel resistance and prior range support near $250 will be on the table.