October 21, 2021
Tesla might have carved primary Wave 2 around $880 levels on Tuesday. The tech stock has slipped through $865, producing an evening star candlestick pattern on the 4H chart. Prices need to stay below $900 resistance to keep the bearish structure intact.
Furthermore, Tesla needs to drop below $785 initial support to confirm its first step towards a larger bearish reversal. As seen here, Wave 2 was expected to terminate around $820-25 mark, which is fibonacci 0.786 retracement of Wave 1.
Tesla bulls have extended through $880, which is still potential Wave 2 termination. A bearish turn now and break below $785 will confirm that bears are back in control. Alternatively, a push through $900 will void the bearish structure in the short term.
The tech stock had dropped between $900 and $539 mark, subdividing into five waves carving an impulse. It is marked as primary Wave 1 on the chart here. The subsequent rally between $539 and $880 looks like a complex corrective wave (3-3-5), marked as Wave 2.
If the above proposed structure holds well, Tesla should reversal lower anytime soon and drag lower to $400 levels as Wave 3 begins to unfold.
The Profinacademy.com Team
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