Chart Of The Day: Tesla Soars In Pre-Market Trading; Technicals Point Higher Too

Though most conventional automakers had a disappointingly slower 2021 due to chip shortages hampering production and deliveries, along with rising inflation weighing on sales, Tesla (NASDAQ:TSLA)—always the contrarian—took the fast lane. 

After the Austin, Texas-based electric vehicle maker announced yesterday it had delivered 308,600 cars in the fourth quarter, boosting annual sales to over 936,000 vehicles, for an increase of 87% from the previous year, the stock soared in pre-market trading on Monday. Shares of TSLA are currently up more than 7%, trading at $1,134.68 at time of writing. That's a gain of almost $80 just this morning.

The astonishing performance makes Tesla's fundamentals breathtaking in a positive way, but the stock's short-term technicals look more challenging.

TSLA Daily

Shares have been trading within a falling channel since the Nov. 4 all-time high. Can bulls overcome the bearish pattern where supply has been dominating the trend? The broader picture could provide an answer.

TSLA Weekly

This more extensive view makes it clear the daily falling channel is just in the short term. Over the longer term the trend is obviously rising. It's plainly defined in the rising channel since the March 2020 bottom, supported by the 50 WMA.

Also, now that investors have bid up the earlier $1,126.50 price, traders have broken through the topside of the falling channel, suggesting the short-term price will now return to the long-term uptrend.

Trading Strategies

Conservative traders should wait for the price to confirm the breakout, by retesting the top of the broken, short-term falling channel.

Moderate traders would wait for a buying dip.

Aggressive traders could enter a long position now, according to a trading plan that addresses their timing, budget, and temperament. Here is an example:

Trade Sample

• Entry: $1,125
• Stop-Loss: $1,100
• Risk: $25
• Target: $1,225
• Reward: $100
• Risk-Reward Ratio: 1:4