TSLA Stock: Momentum Support Higher Prices
The market continues its ascent towards higher valuations, and suggesting anything other than a bullish stance has proven to be ill advice. The path of resistance is geared towards higher prices, and there are many setups suggesting that further gains can be expected.
I am focusing on Tesla Inc (NASDAQ: TSLA) stock because I have reason to believe that Tesla stock is all set to make a move towards higher prices. These beliefs are centered around the company’s stock chart. And given the scope of the current bullish market environment, this move could be quick and quite intense.
For those who have not frequented my work in the past, let me briefly outline that my views on an investment are generated by analyzing the company’s stock chart. This method of analysis is called “technical analysis,” and I have spent the last two decades studying and applying this method. I can attest–and I am sure many of my followers can too–that when this method of investment analysis is applied correctly, the results are outstanding.
The following TSLA stock chart using a weekly scale illustrates why I believe that Tesla stock is primed to make a move towards higher prices:
Chart courtesy of StockCharts.com
The Tesla stock chart focuses on the moving average convergence/civergence (MACD) indicator. MACD is trend following momentum indicator that distinguishes whether bullish or bearish momentum is influencing the price action in a stock. Bullish momentum creates a path of least resistance geared towards higher prices, while bearish momentum cross creates a path of least resistance geared towards lower prices.
A stock cannot make a sustain move in either direction unless the applicable momentum is supporting it, and the MACD signals highlighted on the stock chart are a great example of this notion.
In December 2016, a bullish MACD cross was generated. This indication suggested bullish momentum was influencing the trading action in Tesla stock, paving a road towards higher prices. While this indication was in bullish alignment the TSLA stock price appreciate from $178.18 to $386.99, tacking in 117.19% in 6.5 months.
In July 2017, a bearish MACD cross was generated. This indicator suggested that bearish momentum was influencing the the trading action in Tesla stock, paving the road towards lower prices. while this indication was in bearish alignment the stock price refrained from advancing, and instead it traded in range bound support at $300.00 and resistance at $380.00.
Currently, a bullish MACD cross is begin generated, and it implies that higher prices are likely to prevail, which means it is very likely that the stock prices is going to move north of resistance at $380.00 and forge a new all-time high.
These indications supporting the notion of higher prices are in line with the bullish backdrop already suggested by the monthly Tesla stock chart, which is highlighted below:
Chart courtesy of StockCharts.com
This long-term monthly TSLA stock chart illustrates that since this company made an advance towards higher pries in 2013, the price action has been constructive in nature.
Constructive price action consists of an alternating waves structure made up of impulse waves and consolidation waves. The waves highlighted in the green are impulse waves, and they capture the period in a bullish trend where the stock price stages a sustained move towards higher prices. Impulse waves in a bullish trend are usually in development while the MACD cross is in bullish alignment.
The waves highlighted in purple are consolidation waves, and they capture the stage in a bullish trend where the stock price corrects. Corrections unwind any overbought conditions that have been created, and they set the stage so a new advancing impulse wave can follow. Consolidation waves in a bullish trend are usually in development while the MACD cross is in bearish alignment.
Since February 2017, the monthly MACD indicator has been in bullish alignment, supporting the notion that an impulse wave is in development, and therefore a sustained move towards higher Tesla stock prices can be expected.
The bullish MACD cross that was generated on the weekly chart, comes at a time when the monthly MACD cross was already in bullish alignment. This is a powerful signal, and I would not be the least bit surprised to see TSLA stock price accelerate higher in the weeks ahead.
My price objective on TSLA stock is $500.00, and I was able to generate this price objective using the alternating wave structure. The theory behind this wave structure is that the consolidation wave acts as a midpoint in a trend, and therefore, the developing impulse wave, should mirror the impulse wave that preceded the consolidation wave.
I have reason to believe that higher Tesla stock prices are on the horizon. This belief is based on a number of indications that have been generated on the TSLA stock chart. As long as these indications remains in bullish alignment, I will continue to view Tesla with a bullish perspective.