TSLA: The difference between Pullback and Reversal.

Hello traders and investors! Tesla did some very good and technical movements recently! Let’s see how it is behaving now, and how to proceed.

The hourly chart is showing us that Tesla is passing through a pullback, and it is now trading around the 21 ema, which is a natural support for the price, at least in the short-term.

If you are aiming for the long run, there’s no reason to sell in panic your stocks, as pullbacks are expected and healthy movements. In fact, pullbacks are opportunities to buy, or to buy more/again.

It is different from a reversal sign, as the volume is decreasing during the correction. This is one of the main characteristics that differentiate a pullback from a reversal.

According to Dow Theory 5th tenet, "The Volume Must Confirm the Trend", and when we see a movement against the major trend, which has low volume, most likely it is just a pullback, because the volume isn't confirming the trend.

But the high volatility may bring some erratic movements in the short-term, but nothing that changes the bull trend. We would need much more signs to see a reversal on Tesla.

Right now, we just filled the Exhaustion gap in the hourly chart, and as it is usual, every time Tesla does an Exhaustion gap, it gets filled in a few days, and we see some sideways movement next. Let’s see if this pattern will repeat again!

Now, let’s see the daily chart:


If you are following my exit strategies for Tesla, you would’ve booked at least half of your profits yesterday, because yesterday’s candlestick closed under the previous candlestick low. This is trailing stop, and an intelligent way to manage your positions.

Also, see how the volume always decreases during the accumulations, and rises after the explosion. Right now, an accumulation would be good and expected.

In fact, Tesla could hit the purple trendline and the trend would still be very bullish for the stock. But since the trend is too strong, we can’t rely too much on this scenario. I believe that Tesla could hit the 21 ema, or even the redline (previous top) before the next explosion (of course, if the next explosion will happen).

My recommendation here is to not panic, ok? There’s nothing indicating a reversal, and some volatility is expected now. A pullback would just be opportunity to buy Tesla, not to sell your stocks to someone who’s waiting to buy at the pullback.

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