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Tesla, Inc (NASDAQ: TSLA) is trading higher on Friday in continued sideways consolidation that’s taking place just below the 200-day simple moving average (SMA) on the daily chart.
The 200-day SMA is a bellwether indicator used in technical analysis to determine if a stock is in a bull or bear cycle.
The EV giant's most recent consolidation is taking place within a double inside bar pattern. An inside bar is usually followed by a continuation move in the direction of the trend.
An inside bar pattern has more validity on larger time frames (four-hour chart or larger). The pattern has a minimum of two candlesticks and consists of a mother bar (the first candlestick in the pattern) followed by one or more subsequent candles. The subsequent candle(s) must be completely inside the range of the mother bar and each is called an "inside bar."
A double, or triple inside bar can be more powerful than a single inside bar. After the break of an inside bar pattern, traders want to watch for high volume for confirmation the pattern was recognized.
The Tesla Chart: Tesla’s inside bar pattern is neutral because although the stock surged 21% higher between June 26 and Aug. 4, Tesla is in a confirmed downtrend. Traders can watch for a break up or down from Wednesday’s mother bar on Monday to gauge future diection. In order to confirm the pattern is recognized, traders will want to see the break made on higher-than-average volume.
Photo courtesy of Tesla.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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