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Can Tesla Shares Reach $600?

By Dr. Arnout ter Schure Stock MarketsNov 17, 2020 12:57PM ET
www.investing.com/analysis/can-tesla-reach-600-200544913
Can Tesla Shares Reach $600?
By Dr. Arnout ter Schure   |  Nov 17, 2020 12:57PM ET
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It has been almost two months since I last provided an update on Tesla (NASDAQ:TSLA) stock. See my article here.

Back then I was bearish on Tesla. It dropped another 10% at the low the next day, but stalled at $391, not the low $300s I was looking for. Why? Because it appears Tesla was forming a triangular-shaped correction. When I wrote the update, I could not know this was forming, because as said several times “Corrections are always the trickiest to forecast as they can take on many forms.” See figure 1 below.

Figure 1:

Tesla Daily Candlestick Chart With Detailed Elliott Wave Principle.
Tesla Daily Candlestick Chart With Detailed Elliott Wave Principle.

Well, now we have our form: a triangle. See here for a basic explanation of the EWP triangle correction. Today, Tesla broke out of that triangle. If it can hold above the upper blue dotted downtrend line that has held all upside in check since the stock topped early-September, I expect it to move higher in a wave-5 to ideally $535-540, grey arrow where wave 5=1, but possibly as high as $605-610 based on simple symmetry breakout (blue arrows) of a classic bull flag.

The technical indicators (RSI5, MACD, FSTO, Money Flow Index) are all starting to point back up and give buy signals. In addition, so far today’s move higher launches price back above its 10-, 20-, and 50-day Simple Moving Averages (SMAs), while it has been all along above its rising 200d SMA. Thus, the last two months must still be considered a correction within a larger uptrend.

Zooming out to the weekly timeframe, see Figure 2 below, I find (black) major wave-3 topped around the 216.80% extension of wave-1, measured from wave-2: $502 vs $490. Since that high, wave-4 has stalled within the 23.60-38.20% retrace zone, typical for a 4th wave. It is now trying to breakout of the triangular pattern. A weekly close featuring a breakout would of course add weight to the evidence

Figure 2:

TSLA Weekly Candlestick chart With Elliott Wave Principle Count.
TSLA Weekly Candlestick chart With Elliott Wave Principle Count.

Bottom line: if Tesla can hold at least $428, and from an EWP-perspective $380 ultimately, it has completed a larger 4th wave as a (tricky) triangle and can now move higher to ideally $535-550, possibly as high as the low $600s to complete wave-5 of larger wave-III/C. From those levels an even larger correction than the recent one should be expected. We will deal with it when we get there, let's first nail this breakout and ride the next leg higher as I alerted my private twitter trading feed members to.

Note: I did not mention the reason why Tesla is supposedly rallying. I.e. the “news” it will be included in the S&P 500 next month. The why is not important for trading. One does not need to know the why to make trading decisions. What only matters are – in this case – Tesla is moving higher to certain mathematically calculated price-levels (target) and in order to get there it should not break below certain price levels (stop). That is the actionable take-away and all we really need to know.

Can Tesla Shares Reach $600?
 

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Can Tesla Shares Reach $600?

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Comments (6)
Jesse Mulliniks
Jesse Mulliniks Nov 18, 2020 12:13AM ET
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*Asks the magic conch and pulls string* “No”
Jerome NY
Jeff_Musk Nov 18, 2020 12:03AM ET
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commonly think it will reach 250 instead of 600 lol. but Mechanical trading and Index Funds could make it 600 otherwise it's just a huge balloon.
Leon Kelly
Leon Kelly Nov 17, 2020 9:29PM ET
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Congestion phase.. until it bust out 465 range it's a stay away..
Adam Mohr
Adam Mohr Nov 17, 2020 7:44PM ET
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The why os all spy ETFs now have to but a large weighted percentafe of stock to balance out..on a heavily shorted company
Gordon Gekko
Gordon Gekko Nov 17, 2020 4:21PM ET
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LOL
Napat Limboot
Napat Limboot Nov 17, 2020 4:02PM ET
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