Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Tesla: Prepare For Congestion On The Daily Chart

By Anna CoullingStock MarketsNov 16, 2021 06:29AM ET
Tesla: Prepare For Congestion On The Daily Chart
By Anna Coulling   |  Nov 16, 2021 06:29AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

The daily chart for Tesla (NASDAQ:TSLA) makes interesting reading at present and despite the volatility generally associated with this stock we may be entering a period of congestion over the next few days as the stock consolidates in the $1000 per share area.

For intraday traders little changes as there are always opportunities to trade both sides, but for longer-term investors, it may be a question of being patient as we wait for the next leg to develop. And the reason for this is twofold.

Tesla Congstion Daily Chart
Tesla Congstion Daily Chart

First, the dramatic widespread down candle which triggered the correction and which I explained in my previous post on Tesla from a volume price analysis perspective triggered the volatility indicator on the NinjaTrader platform. Even for a stock such as this, triggers on the daily chart are relatively uncommon. although in the rapid ramping up of the price prior to the fall, we saw three such events.

So what does the indicator signal? The indicator works on average true range assessing whether the price action is outside this range and if so, the indicator is then triggered. What follows thereafter is either a reversal in price or at least congestion within the spread of the candle. The reason for this is simple to understand when viewed from the perspective of the market makers.

Volatility to the upside is used as a mechanism to generate FOMO – the fear of missing out. A fast-moving price generates this response and traders and investors duly jump in, only to be trapped in the consequent move, and are either taken out on their stops, or they close out as the emotional squeeze of congestion follows. Either way, it is an extremely profitable tactic – for them.

For Tesla, the volatility trigger has resulted in buy orders being triggered at the $1k level (the pull of round numbers) but the push higher has stalled with the price returning to this level and move sideways.

Second, we are now trading at the VPOC as denoted with the yellow dashed line, and as such, this is now the fulcrum for this stock having jumped from the $700 region (see my previous post). This is where we now have price agreement. In other words, the bulls and bears are equally weighted and are in a tug of war and there is no bias, long or short, and a further reason to expect congestion at this level.

Yesterday, we saw the price dip and recover on good volume as the buyers moved back in to pick up the stock on the expectation of a recovery following the sharp sell-off, and in terms of the longer-term direction, the key levels are as follows. $1100 per share to the upside where we have a low volume node which should see the stock move to $1150 with relative ease, whilst to the downside, it is $940 per share where potential volume-based support falls away rapidly and if taken out, the price may accelerate through to $800 where deeper support awaits.

Tesla: Prepare For Congestion On The Daily Chart

Related Articles

Craig Erlam
Another Blow To Sentiment By Craig Erlam - Jan 21, 2022

A turbulent end to the week with widespread selling as underlying anxiety in the markets once again takes hold. The hope going into earnings season was that companies were going to...

Tesla: Prepare For Congestion On The Daily Chart

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Antoine Richard
AnRi Nov 16, 2021 2:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
it's funny how I came to the same conclusion using some kind of common sense feeling.. I'm not being critical here! the sharp rise from 800 to 1200 was just too insane, my insanity tolerance is already being challenged with tsla's future-oriented valuation and as a long tsla "advocate" I had no illusion regarding this sudden soaring stock – 1250? what do you expect: 1500? yes but not right now, it's not going to crazy doubling digits within a couple of weeks, I'm not that gullible. 2022 will be the time, maybe. tsla is still a bit volatile, but reasonably volatile, within the boundaries of insanity that is ;) maybe. anyway, long tsla!
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email