The barrage of negative news flow, week after week has finally taken its toll on the stock price. With just a few trading days left until the end of the month it looks like TSLA has broken a key support level of $266 on above average volume. The price action this month with a breakout lower than support is a rather big warning to Tesla bulls that the party is over and it’s time to look at their options going forward.
Based on the monthly price action this month, together with the price relatively close to the long term moving average (green line), the next two levels of support are within reach over the second half of 2019. The next initial support level which was also a major level previously is around $188 - $189 or a $45 drop from current levels. This could easily be achieved in the next month or two. Beyond the first level of support, the next area to watch is between $126 - $128.
The daily chart for Tesla is looking just as bearish as the monthly chart price action. With the last two trading days breaching its $250 support level of extremely high volume and negative news flow including a large miss on already revised lower earnings this week.
Going forward this week, we are likely to see soon a short-term reversal / consolidation phase take place, with a possible target of its old $250 support level, which is now its resistance area. Given the daily chart has been experiencing a series of lower highs and lower lows, leading up to this week we could see a breakout for Tesla. I'm expecting any rally in share price when it does occur to be short lived.
Once we have seen a consolidation take place, I'm expecting a move to the next level of support on the daily chart of $205 over the coming weeks and months. Especially given the company itself requires a capital raising soon, has high debt levels and has negative cash flow within its current business plan.
For Tesla bulls this month price action on both the daily and monthly chart is an early warning on further weakness ahead for this “Auto Tech” stock for the remainder of 2019.
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