Tesla Stock Is All Set to Stage a Run Towards $500.00

Tesla stock
Credit:iStock.com/jetcityimage

TSLA Stock: The Epic Run Towards Higher Stock Prices Continues

I am focusing on Tesla Inc (NASDAQ:TSLA) stock because the price action on the TSLA stock chart is suggesting that higher Tesla stock prices are on the horizon. The method of analysis that I used to create this bullish view is also suggesting that the next price objective, which will also act as a level of price resistance, is the $500.00 price point.

For anyone reading my work for the first time, I generate my views on an investment by analyzing the price action and indications on the company’s stock chart. This method of analysis is called technical analysis and I have been studying and applying this method for nearly two decades. I have devoted so much time to this craft for one simple reason: when it is applied correctly, the results are outstanding.

I first became bullish on Telsa stock in December 2016, when it completed a technical price a pattern that was suggesting that higher prices were on the horizon. The implications suggested by the pattern did not disappoint because Telsa stock staged an impressive run towards higher prices.

In April 2017, I reiterated my bullish stance on this investment when the compilation of constructive price action and a key indicator were suggesting that the trend towards higher prices was set to accelerate.

The following Tesla stock chart illustrates the constructive price action and the key indicator that suggested that an accelerated run towards higher stock prices had begun.

tesla price chart

Chart courtesy of StockCharts.com

The TSLA stock chart above illustrates a confluence of indications that support the notion of higher stock prices.

The first indication comes in the form of constructive price action. Constructive price action consists of impulse waves and consolidation waves.

The first wave is an impulse wave and it is highlighted in green. This wave defines the period in a sustainable trend where the stock price stages an advance.

Also Read:

TSLA Could Crash If Elon Musk Exits From Tesla Post Model 3 Rollout

What Investors Keep Missing About Tesla Stock

The second wave is a consolidation wave and it is highlighted in purple. This wave serves to define the period in a sustainable trend where any overbought conditions that were created in the preceding impulse wave are alleviated. This wave is extremely important because it sets up the next advancing impulse wave.

These waves feed off each other and, in an alternating wave structure, they create the necessary building blocks to form and sustain a trend.

In April, Tesla stock exited the consolidation wave in an upward direction, marking a “breakout” on the stock chart. This breakout suggested that a new impulse wave was in development, and it is why I reiterated by bullish view that much higher TSLA stock prices were on the horizon.

One indication is never enough, so I kindly included the bullish MACD cross that was generated in March. MACD is a trend-following momentum indicator that uses signal-line crossings to distinguish between bullish and bearish momentum. The bullish cross serves to suggest that bullish momentum is influencing the TSLA stock price by creating an environment that is geared towards higher stock prices.

These indications remain in bullish alignment, supporting the notion of higher stock prices.

The price action on the Tesla stock chart is suggesting that further gains are likely, as illustrated on the following stock chart.

tsla stock chart

Chart courtesy of StockCharts.com

This Tesla stock chart illustrates similar price action to what was illustrated on the chart before it, except that this one is using a daily scale.

This stock chart illustrates that since December of last year, the price action has been constructive in nature, and therefore, it has the makings of a sustained move towards higher stock prices.

On September 11, TSLA stock exited the consolidation wave in an upward direction, suggesting that a new impulse wave is now set to develop.

Aside from suggesting that higher stock prices are on the horizon, the price action can also be used to generate a potential price objective. The theory behind this wave structure is that impulse waves separated by a consolidation wave tend to mirror each other in terms of length. Applying this theory to this wave structure on the price chart produces a price objective of $500.00.

Analyst Take: 

New indications have been generated that are suggesting that another advance in TSLA stock is set to take place, opening up the door for this investment to challenge the $500.00 price point. This view is being supported by the indications that were generated in April of this year, which are still in bullish alignment, supporting the notion of higher Tesla stock prices.