Tesla Inc (NASDAQ: TSLA)

Tesla, Inc. designs, develops, manufactures, and sells electric vehicles and energy storage products in the United States, China, Norway, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. It primarily offers sedans and sport utility vehicles. The company also provides electric vehicle powertrain components and systems to other manufacturers; and services for electric vehicles through its 135 company-owned service centers and Service Plus locations, as well as through Tesla Ranger mobile technicians.

Take a look at the 1-year chart of Tesla (NASDAQ: TSLA) below with my added notations:

1-year chart of Tesla (NASDAQ: TSLA)

Over the past 7-8 months, TSLA had created a major trendline of support (red), which it broke last month. That break likely meant much lower prices for the stock, and so far that is seemingly happening. More recently, TSLA had created a shorter-term trendline of support (green), which the stock broke yesterday. That break should mean another leg down is underway for TSLA.

The Tale of the Tape: TLSA has broken below two trend line supports. A short position could be entered on a rally up to the trendline, which is currently near $310, with a stop placed above that level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT