Hi traders!
Tesla has arrived at a critical level today. We have two possible counts:
Bullish:
TSLA is in a smaller wave (iii) (green). This wave has to break the channel to be valid. We can expect some manipulation in this zone, so the breakout has to be significant and with volume.
If that happens, we have completed the larger consolidation and can look forward to further bullish action in the next weeks, which should ultimately complete a wave 5 of a larger degree. This scenario would make sense because the wave 4 correction has found support on our channel that we extended from wave 1 and 2 (zoom out to see it). This is a typical pattern.
Bearish:
TSLA is completing wave (b) (red) and moves downward from here for a final wave (c) which consists of 5 sub-waves. Price has to break down immediately for this count to be valid and continue falling towards the $500 mark. This move would then complete our WXY correction pattern and price can move back up for a final wave 5 of a larger degree, possibly in autumn.
How to trade it?
We can attempt a short entry if price shows a sign of weakness on a lower timeframe. The short can target the $500 level. If price does not break down today or on Friday, the short must be exited and we can assume that the bullish count is the valid one. For the bullish scenario we can wait for a re-test of the breakout and go long from there.
What about correlation?
A stronger dollar and higher Treasury yields would help the bearish scenario, as Tesla has a high debt ratio that will become problematic when cheap money ends. DXY still has some possible downside today but may continue its uptrend next week.
Happy trading!
Tesla has arrived at a critical level today. We have two possible counts:
Bullish:
TSLA is in a smaller wave (iii) (green). This wave has to break the channel to be valid. We can expect some manipulation in this zone, so the breakout has to be significant and with volume.
If that happens, we have completed the larger consolidation and can look forward to further bullish action in the next weeks, which should ultimately complete a wave 5 of a larger degree. This scenario would make sense because the wave 4 correction has found support on our channel that we extended from wave 1 and 2 (zoom out to see it). This is a typical pattern.
Bearish:
TSLA is completing wave (b) (red) and moves downward from here for a final wave (c) which consists of 5 sub-waves. Price has to break down immediately for this count to be valid and continue falling towards the $500 mark. This move would then complete our WXY correction pattern and price can move back up for a final wave 5 of a larger degree, possibly in autumn.
How to trade it?
We can attempt a short entry if price shows a sign of weakness on a lower timeframe. The short can target the $500 level. If price does not break down today or on Friday, the short must be exited and we can assume that the bullish count is the valid one. For the bullish scenario we can wait for a re-test of the breakout and go long from there.
What about correlation?
A stronger dollar and higher Treasury yields would help the bearish scenario, as Tesla has a high debt ratio that will become problematic when cheap money ends. DXY still has some possible downside today but may continue its uptrend next week.
Happy trading!