How Are Tesla's Disappointing Results Affecting the Charts?

Here's what will embolden buyers.

Shares of  EV maker Tesla (TSLA)  were trading significantly lower in early market activity Thursday. The cutting edge company reported earnings numbers last evening and traders were disappointed in their margins and other details. Tesla's earnings story is a "top of the fold" story on the front page of the Wall Street Journal.

Back on April 3, I reviewed the charts of TSLA and wrote that "TSLA is pulling back and it is not clear to me whether this is the start of a pullback/correction or if this is a dip we may want to buy. It could take several more days of price action to know for sure." 

Let's review the charts again.

In this daily bar chart of TSLA, below, prices have been correcting lower from the middle of February and have been trading below the declining 50-day moving average line and the declining 200-day moving average line. The trading volume has been decreasing since the end of January which suggests to me that prices are not being pressured by aggressive selling.

The On-Balance-Volume (OBV) line has moved mostly sideways the past two months suggesting more of a balance between aggressive selling and aggressive buying. The trend-following Moving Average Convergence Divergence (MACD) oscillator is hugging the zero line. 

 

In this weekly Japanese candlestick chart of TSLA, below, I see a weakening picture. Prices trade below the declining 40-week moving average line. The weekly trading volume has been slowing from late January.

 

The weekly OBV line is showing some weakness in April. The MACD oscillator has been improving but is still below the zero line. 

 

 

 

In this daily Point and Figure chart of TSLA, below, I can see a potential downside price target in the $149 area. With prices of TSLA trading around $165 we may see some technically oriented traders looking to buy. 

 

 

In this weekly Point and Figure chart of TSLA, below, I can see a bullish price target in the $443 area. A trade at $207.51 may be needed to refresh the upside.

 

 

 

Bottom line strategy: There are many traders and investors who just love Tesla - the car and the stock. Lower prices to start the day will be tempting for some. If a lower shadow develops on the daily candlestick chart as the day unfolds it will embolden others to be buyers.

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