Stock of the day: Tesla

With Elon Musk’s recent purchase of Twitter, interesting things are happening with Tesla. This week is pretty crucial as Tesla’s price managed to break an absolutely crucial horizontal support and set new yearly lows. How did that happen?

Well, the fundamental’s side is well known. Shareholders are not happy with what Elon Musk is doing with his money. Yes sure, it’s his money and he can do whatever he wants to with it, but at the same time, you’re the owner of a publicly traded company and other shareholders can have their objections. Nevertheless, Tesla dropped like a rock, crashing a few important supports.

The first one was the neckline (black) of a giant Head and Shoulders pattern (yellow). That, in theory, activates this formation and brings a long-term sell signal (with a target well below 100 USD). In addition to this, the price managed to retrace more than 50% of the recent uptrend and also break lows from May and June (blue).

That was enough. This week opened lower and the price kept dropping on Monday and Tuesday. The target is currently on the area above 181 USD (orange), where we do have lows from 2021. Chances that we will get there are very high. Later? Later we have 61.8% Fibonacci, which can be considered the last stronghold for buyers. Should the price fall below the 61.8%, it would mean that we’re going to fulfil the target, well below 100 USD, based on the minimum target prediction generated by the H&S formation.