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Tesla: Is A Correction To About $575 Under Way?

By Dr. Arnout ter Schure Stock MarketsFeb 12, 2021 04:18PM ET
www.investing.com/analysis/tesla-is-a-correction-to-about-575-under-way-200560534
Tesla: Is A Correction To About $575 Under Way?
By Dr. Arnout ter Schure   |  Feb 12, 2021 04:18PM ET
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It has almost been a month since I last provided an update on high-flier Tesla Inc (NASDAQ:TSLA). Back then, Tesla was trading at around $846. Based on my Elliott Wave Principle (EWP) count and Technical Analyses (TA) combined, I found:

TSLA [has] currently less upside reward than downside risk for the intermediate-term (weeks-months), but still has long-term potential (months+), when major-5 completes around current levels ($875-925), Primary-III completes, and Primary-IV will take center stage. … A correction of the Primary-degree is a large one, in both time and price, and suggests TLSA should see between $560-600 before primary-V to new All-time highs (ATHs) kicks in.”

Fast forward, and TSLA peaked on Jan. 24 at $900 and is now trading at around $800.

  1. The ideal major-5 target zone of $875-925 was reached, and the stock has lost 11% since;
  2. TSLA has lost 5% since my last update.

Indeed, the reward has not been great.

With another month of data in hand, I now find if TSLA loses $775+/-5 support (which was support in early- and late-January), it will likely fall back to the next support zone at $665+/-5. That would then complete a red wave-“a?”. See Figure 1 daily chart.

That level would also fit with the (blue) 23.60% retrace level, as shown in the weekly chart. When a 4th wave does a 38.20% retrace of the prior 3rd wave, it often finds support at the 23.60% retrace (red wave-a?), bounces back to previous support ($775+/-5 in this case, red wave-b?), i.e., the breakdown level, which now acts as resistance and then the next leg lower (red wave-c?) takes hold to the 38.20% retrace at $575+/-5. Thus, the daily and weekly charts align well with the anticipated pattern, support and resistance levels, and ultimate downside targets for the potential (blue) primary-IV that is now forming.

Figure 1. TSLA daily and weekly candlestick chart with EWP Count and Technical Indicators:

Tesla Daily And Weekly Candlestick Charts.
Tesla Daily And Weekly Candlestick Charts.

The caveat is 4th waves are often the most tricky of corrections and can form many patterns: zig-zags, flats, triangles, double or triple patterns, etc. See here for examples of these distinct EWP patterns. In TA terms, this would be nothing more than a consolidation pattern, aka bull flag, after a +2500% run since 2019, a 1200% run since March 2020, and a +175% run since September 2010. Thus, “some give/digestion of recent gains” is to be expected and completely normal.

Regardless, once the blue Primary IV target zone is reached, I expect the last rally, Primary-V, to new ATHs to complete a large cycle wave. After that, TSLA should see its most extensive haircut in its history.

Bottom line: In the intermediate-term (weeks) TSLA will likely be in a corrective pattern down to $700-575. Longer-term (months), TSLA will most likely still be in a bull that will reach the low to mid-1000s. But, once this bull completes, most of the gains since 2020 will probably be erased. Hence, as always, pick your trading- and investing timeframe carefully and have an exit strategy in place.

Tesla: Is A Correction To About $575 Under Way?
 

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Tesla: Is A Correction To About $575 Under Way?

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Comments (24)
Andrew Bevan
Andrew Bevan Mar 06, 2021 11:58AM ET
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Terrific call! Well done! 👍
Momentum Tradarn
Momentum Tradarn Mar 05, 2021 11:30AM ET
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Ooops! To 472?
Vaishak Sharma
Vaishak Sharma Feb 25, 2021 4:21PM ET
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Things seems to be going your way....Dr. Nostradamus!
Iphone Satis
Iphone Satis Feb 24, 2021 3:15AM ET
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Hi,  Your analysis is awesome and working like a clock. Could you update it with recent sell off , I wonder where we are ? Do you think we see the bottom of Primary IV or  just completed (or in) red-wave a  ?
Glenn Ebersole
Glenn Ebersole Feb 14, 2021 8:16AM ET
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Cults end because of weak leadership.
Mark Henline
Mark Henline Feb 13, 2021 9:02PM ET
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This matches my analysis .we shall see..I laid it out for 575 area by 3/15. in December
Candy Man
Candy Man Feb 13, 2021 6:08PM ET
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Btw. Did you consider the possibility of failing 5th wave of the primary ? If 3rd primary wave was very strong it is more likely scenario !?
Candy Man
Candy Man Feb 13, 2021 6:02PM ET
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Great analysis, thank you.
Shaka Afri
Shaka Afri Feb 13, 2021 10:58AM ET
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Great analytics on the technicals but still wrong. The moment you come up with models that can account for a transformative company, you my friend will be a rich man. Until then, easy on the candlesticks.
Candy Man
Candy Man Feb 13, 2021 10:58AM ET
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This type of analyse has proved to fit pretty well on tesla so far. I think one reason is the big cult or crowd attraction to this stock.
Rodolfo Barraco
Rodolfo Barraco Feb 13, 2021 10:10AM ET
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If tesla erases all gains it will drag the entire market with it... is the yahoo of this era. Are the markets ready for it?
Mark Henline
Mark Henline Feb 13, 2021 10:10AM ET
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thats why they were inducted into the sp 500.. ...
Enron Mask
Enron Mask Feb 13, 2021 6:13AM ET
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Tesla will grow as main shareholder of Space X and will increase Crypto involvment, then Bitcon will start to buy Tesla. Perfect plan!
Rodolfo Barraco
Rodolfo Barraco Feb 13, 2021 6:13AM ET
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Unless bitcoin gets banned as just happpened in india. Will hapen next in europe and usa and it will be worthless. Then tesla will fall double. Be ready to lose it all
Keith Whang
Keith Whang Feb 13, 2021 6:13AM ET
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Tesla owns zero of space x
Kenneth Chang
Kenneth Chang Feb 13, 2021 3:52AM ET
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I am prepared, looking forward to it actually...
data junkie
data junkie Feb 13, 2021 12:04AM ET
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as long as you have a cult and free money, TSLA will soon break Trillion dollar market cap and growing. Do no short the cult
Lawrenti Berija
Lawrenti Berija Feb 13, 2021 12:04AM ET
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agreed 👍
Tim Manriquez
Tim Manriquez Feb 13, 2021 12:02AM ET
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I hope all you unethical short seller's go bankrupt.
Joon Pak
Joon Pak Feb 13, 2021 12:02AM ET
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What makes some shorts ethical and others unethical?
Fabrizio Fusaro
Fabrizio Fusaro Feb 13, 2021 12:02AM ET
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Short an overvalued stock to avoid people get scammed is much more ethical that pump a bubble
khaled alameri
khaled alameri Feb 13, 2021 12:02AM ET
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Dr. I like you analysis.. which depends on the historical data!.. i really can coordinate with you in in your future analysis were other factors can be considered to influence the graph . I have 30 years of experience as a market Market for some shares...RegardsDr. Khaled Alameri
Bulent Ok
Bulent Ok Feb 12, 2021 10:51PM ET
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Many that attempt to short it will melt just like Melvin. Watch the space...
Bulent Ok
Bulent Ok Feb 12, 2021 10:48PM ET
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Reddit tribe will not let it dip... Infact, it will be all time high by end of February
Sergio Ortiz
Sergio Ortiz Feb 12, 2021 10:48PM ET
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In case you haven't noticed, the "Reddit tribe" is about propping up small(ish) companies that have been beaten down by short sellers, which doesn't exactly describe Tesla.
leon kelly
leon kelly Feb 12, 2021 10:42PM ET
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Can't wait to short them and Roku smh
George Christopher
George Christopher Feb 12, 2021 10:40PM ET
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hope it goes up and splits again
Jeff Jenkins
Jeff Jenkins Feb 12, 2021 8:57PM ET
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Can you please do a sp500 chart?
Albert Robinson
Albert Robinson Feb 12, 2021 5:41PM ET
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So basically hang on a few months if you want your shares to be worth $1000+?
Jason Zou
Jason Zou Feb 12, 2021 4:52PM ET
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Sounds like a forture teller.
MK MK
MK MK Feb 12, 2021 4:43PM ET
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Fools still have to much money not to let Tesla go low
Larry Deangelis
Larry Deangelis Feb 12, 2021 4:41PM ET
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I agree! Five dollars and seventy five cents
 
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