Tesla ideally stays below $729 highs as bears are back in control

Tesla managed to close around $688 yesterday, pulling back from $654 lows the day before. This rally could be seen as lower degree wave ii within intermediary wave (iii) of primary Wave 3. If the above is correct, the tech stock would stay below $729 mark and continue lower towards $400 levels in the next several weeks.

Tesla wave structure could be seen as follows: The drop between $900 and $539/40 was clearly sub divided into 5 waves, marking an impulse Wave 1. Ideally an impulse move is followed by a correction in the opposite direction.

Tesla bulls were able to produce corrective Wave 2 (a-b-c) towards $780 mark, which is also close to fibonacci 0.618 retracement of Wave 1. Since then, Wave 3 seem to be unfolding and is potentially extending with intermediate waves (i) and (ii) in place around $540 and $729 levels respectively.

If the above is correct and holds well, Tesla ideally stays below $729 and should be heading lower towards $400 and $300 as Wave 3 unfolds. Intermediate wave (iii) might be underway since $729 highs and might have carved wave I and ii around $648 and $688 respectively.

Traders might be preparing to initiate fresh short positions with a potential risk above $729 levels and targeting below $400 levels respectively.

Prepared by

The Profinacademy.com Team