Tesla carves primary Wave 2 around $800 mark

Tesla seems to have terminated its primary Wave 2 correction around $800 levels on September 27. The tech stock has since reversed lower and has closed around $780 mark on Wednesday. Structurally, primary Waves 1 and 2 seems to be in place around $539 and $800 levels respectively.

If the above preferred count holds well, Tesla should be producing Wave 3 lower toward $400 mark going forward. Also note that Wave 2 corrective rally unfolded as 3-3-5 standard flat, reaching up to the fibonacci 0.786 retracement of Wave 1.

Furthermore, Tesla stock prices have tested the Elliott Channel resistance close to $800 levels, a common guideline for the corrective wave to terminate. Considering all above facts, high probability remains for a sharp decline as Wave 3 progresses.

Earlier, the stock had dropped between $900 and $539 levels subdividing into five waves, carving an impulse wave, which is marked as Wave 1 on chart. Subsequently, Wave 2 correction seems to have terminated around $800 mark.

Traders might be preparing to initiate fresh short positions from current levels with risk above $900 and potential reward below $400 levels respectively.

Prepared by

The Profinacademy.com Team