TESLA MOTORS Watch out for the $165 break!
Analysis published on Thursday, April 20, 2023
It’s the cold shower at Tesla. And for good reason, the American company disappointed with its results for the first quarter of 2023. Sales are certainly up, but earnings per share have contracted by 23%. On the other hand, the free cash flow to which investors are sensitive, is melting like snow in the sun to $441 million against $2.8 billion in Q1 2022. With stocks rising, the price reduction strategy could constitute proof a loss of leadership in electric vehicles.
After suffering late last year through a head-and-shoulder (ETE) validation, prices rallied dramatically over the $110 support and in reaction to a slightly oversold weekly RSI. But to the chagrin of the bulls, the trend remains clearly bearish since the all-time high near $420. To the point that we would witness a rebound from the dead cat.
Not only that, the neckline of the ETE could serve as a pullback. And in parallel, the MACD below the zero line, would approach a bearish crossover. Not to mention that the RSI could fall below the neutral zone at 50. Therefore, the validation of these unfavorable signals would open the prospect of a new wave of correction in the continuity of the downtrend. In which case, the break of the $165 support could be fatal. The bears could once again carry the blow in the direction of $110. Under this support, it would be a question of eventually targeting $63.
If this pessimistic scenario were to occur, we would fear that it would cause an earthquake in the financial world. Because precisely, Tesla is one of the stocks most preferred by retail investors.
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