Stock of the Day: Tesla

Tesla, which we recently analyzed on the 4th of August, has delivered a textbook example of a bear trap. Back then, the price broke to the downside from a symmetric triangle pattern, triggering concerns of a deeper drop. We warned about the possibility of a false breakout, and that’s exactly what unfolded.

The price quickly reclaimed the broken lower line of the triangle, turning the false breakout into a strong buy signal. As is often the case, false breakouts tend to produce powerful moves in the opposite direction, and Tesla has followed that script well.

Currently, the stock is trading back inside the triangle, with momentum building. The technical picture suggests that a breakout to the upside is now a real possibility. A daily close above the upper line of the triangle would be a strong and clean signal to go long, opening the door for further gains.

For now, the sentiment has shifted back in favor of the bulls — and Tesla’s next move could be decisive.