The trade idea I presented in my previous Tesla post (linked) did not work because price went lower on Thursday and pulled RSI down below 35 (orange rectangle).
My initial idea on 16 Nov. was for RSI to move higher from 35 as price rose. Instead RSI fell and stayed below 40 for two days (remember this is a 30m frame), until the green candle in the final Friday hour.
After two days of very little price movement, which is quite unusual for this stock, stochastic %K(10) gave a sign of strength (yellow arrow) in the final hour Friday.
Yellow box marks 2-3 candles that create the stochastic spike
Notice the candles in Friday's box seem insignificant, except for a higher close, yet %K shows the strength.
To the left, there is a yellow arrow marking a %K spike that matches with a very bullish candle. Price continued to gradually rise over the next four days. However looking at RSI below 30 on 9 Nov, I expected it to stall under 65 for a reversal. Now price has returned to make new lows but closed above 180, which is a good sign.
Along with the %K spike on Friday, RSI moved over 40 but has yet to cross into bullish territory. I am looking for a candle close over the downtrend line, ideally early Monday, that pulls RSI over 50. If Friday's %K stochastic sign is supported by further buying, then RSI should, Mon-Tues, move over 67 and stay over 50.
If price spends time struggling under 180 during the first half of Monday or quickly makes a new low, then this trade design is completely negated and I may look for puts down to 160.
My initial idea on 16 Nov. was for RSI to move higher from 35 as price rose. Instead RSI fell and stayed below 40 for two days (remember this is a 30m frame), until the green candle in the final Friday hour.
After two days of very little price movement, which is quite unusual for this stock, stochastic %K(10) gave a sign of strength (yellow arrow) in the final hour Friday.
Yellow box marks 2-3 candles that create the stochastic spike
Notice the candles in Friday's box seem insignificant, except for a higher close, yet %K shows the strength.
To the left, there is a yellow arrow marking a %K spike that matches with a very bullish candle. Price continued to gradually rise over the next four days. However looking at RSI below 30 on 9 Nov, I expected it to stall under 65 for a reversal. Now price has returned to make new lows but closed above 180, which is a good sign.
Along with the %K spike on Friday, RSI moved over 40 but has yet to cross into bullish territory. I am looking for a candle close over the downtrend line, ideally early Monday, that pulls RSI over 50. If Friday's %K stochastic sign is supported by further buying, then RSI should, Mon-Tues, move over 67 and stay over 50.
If price spends time struggling under 180 during the first half of Monday or quickly makes a new low, then this trade design is completely negated and I may look for puts down to 160.
Comment:
I am taking this idea off my watch list for the week since premarket prices are at new lows. There may still be a trade in the making but I will stick with my plan since there are many other setups to take instead. My caution was that $TSLA has not yet touched the weekly 200ma.
