Yahoo Finance

Key Takeaways

• Tesla shares surged Wednesday after spending several weeks in the slow lane following a huge post-election rally.

• The stock has consolidated within a flag pattern, indicating a continuation of the strong uptrend.

• Bars pattern analysis, which takes the stock’s strongly trending move from October 2019 to February 2020 and repositions it from November's ascending triangle breakout, forecasts a bullish longer-term price target of around $775.

• Investors should monitor key support levels on Tesla's chart around $300 and $265.

Tesla (TSLA) shares surged Wednesday after spending several weeks in the slow lane following a huge post-election rally.

The 8% gain Wednesday came as weaker-than-expected inflation data boosted investor hopes that the Federal Reserve will be in a position to cut interest rates again, which would help boost demand for EV’s through cheaper car financing costs.

Tesla shares are 12% below their mid-December high but have surged 70% since the early-November election, in part due to expectations that the EV maker’s self-driving robotaxi ambitions could be fast-tracked under the incoming Trump administration.

Below, we take a closer look at the technicals on Tesla’s weekly chart and identify important price levels that investors may be watching.

Flag Pattern Signals Bullish Continuation

Tesla shares have trended sharply higher since breaking out from an ascending triangle in early November.

More recently, the stock has consolidated within a flag pattern, indicating a continuation of the strong uptrend. In addition, the 50-day moving average (MA) sits poised to cross back above the 200-day MA to generate a bullish golden cross, a chart event that signals a new move higher.

However, it’s also worth pointing out that trading volumes have generally declined throughout the stock’s post-election rally, suggesting that some larger investors may remain on the sidelines.

Let’s analyze Tesla’s chart to determine where the stock’s uptrend may be headed next and identify several key support levels that may come into focus during pullbacks.

Longer-Term Price Target

Investors can forecast a longer-term bullish price target on Tesla’s chart by applying the bars pattern tool, a technique that analyzes prior trends to predict potential future moves.

To do this, we take the stock’s strongly trending period from October 2019 to February 2020 that follows a similar breakout from an earlier ascending triangle and reposition it from November’s breakout. This projects a target of around $775, representing about 80% upside from Wednesday’s closing price.