Will Tesla Stock Continue To Rise?

By Stephen Loke

For those of you who have not read the news about the car industry lately, here's an update for you. Toyota, Honda, Ford and GM is not the companies that are hotly talked about these days. The hot item today is the young car company TESLA Motors. This company manufactures electric vehicles and its car Model S has been a hit with consumers. Not only that, the stock price have almost doubled since the beginning of the year. Moving from $150 to $277 in a span of 7 months is no small feat. Along with the rise of the stock price, the founder of the company Elon Musk has increased his net worth tremendously. His net worth stands at $11.7 Billion today.Just a few years back, the stock price of TESLA Motors was around $20. Today, it has gone up by more than 10 times!

Recently, Elon Musk commented that the stock price of TESLA is a bit high. The stock price fell almost instantly, down 3% but the founder urged people to look at the long term. So, the question is, will TESLA Motors stock price continue to rise or will it form another bubble like so many other stocks?

Here's an analysis from a technical analysis point of view.

The chart below shows the weekly chart of Tesla Motors stock price. You can see that the stock has gone up a lot during this few years. Recently, it formed a topping tail (a bearish sign) showing that it is currently overbought and might topple soon. However, since the stock is in a rising 45 degrees angle, we should not read too much into the bearish signs yet.

tesla stock price

The chart below shows the daily chart of TSLA. We zoom in on the stock. Although the stock is overbought, It is still above its rising 50 MA and rising 200 MA. There is a strong price support around the area of $250. If the stock drops to around there, I might consider purchasing it.

tesla stock analysis

The blue area that I have highlighted is a base that the stock price has formed. Usually strong stocks form bases which acts as a rest before it continues higher in the future. Picture a marathon runner taking a rest before marching onwards.

Conclusion (For Layman)

Okay, if you do not understand all the technical stuff that i have said, it is alright. Here is a conclusion in simple English:

  1. I do no think that TSLA is in danger of having a crash.
  2. I think the future is bright for TSLA
  3. However it is currently overbought and it might be wise to stay on the sidelines a while
  4. You might want to consider buying the stock if it drops to around $250 which is where price support is.
  5. However, if the stock drops below $240, we want to get cautious here. The stock is not as healthy as we think it is. 

There are no certainties in trading or buying a stock. All we do as traders is to analyze data and make decisions as time goes by.

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