Tesla (NASDAQ:TSLA) stock advanced to $764.45 on Wednesday and pulled back after briefly testing the key resistance confluence of 61.8% Fibonacci. It then closed down $36 from those highs settling on Friday at $736.27, printing a black shooting star candlestick for the week suggesting that investors were taking profits after a 109% rise off of the 52 week lows.
TSLA was down -18.23% from its respective 52 week highs and less than 2 points shy of a bear market (-20%) after triggering a Double Bottom Breakdown Friday, using basic principles of point and figure analysis.
The stock has a P&F measured move target near $705 with key Fibonacci support confluence near the 701.5 level which is -4.7% lower that coincides with the uptrend that has been in place since June. A close below that level would increase the likelihood of July's swing low near $627 or -15.1% lower.
On the upside, should the trendline hold near $701 that would also increase the odds of a test of the April swing high near the $780 level or +5.9% higher.
Members of Day Traders group, (many of whom have been with us for many years) know that me and our esteemed colleagues are some of the biggest TSLA bulls on Wall Street and have been caught inherently pounding the proverbial table on more than one occasion back especially when TSLA was trading at $35 per share back in 2019.
Having said that, in full disclosure at this time I have already sold my TSLA shares and hope to re-load at a more opportunistic level in the future.
While no one can predict the future, technical analysis gives technicians the opportunity to become better prepared as to what could develop into excessive risk in the near future and allows us to be prepared when the inevitable market pull back comes to fruition.
Ark-Invest team, headed up by Cathie Wood, are profound technical analysis connoisseurs who have garnered my utmost respect and admiration. They usually seem to buy and sell at key Fibonacci confluences and this past week was no exception.
Ms. Wood, being one of Tesla's most enthusiastic outspoken bullish investors regarding the disruptive EV pioneer's future, has collectively sold more than $112 million of Tesla stock this past week as the share price found resistance near the enigmatic 61.8% Fibonacci level. That level has been a significant area of overhead resistance and supply after Tesla stock made an all time high at $900 just 8 months ago.
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