Much has been written about the incredible rise of Tesla (NASDAQ 🙂 stocks. The reasons why the electric vehicle manufacturer's stock has skyrocketed are many and include: its status as a green initiative; the many technological applications of his company; and the charisma of founder and CEO Elon Musk.
We also noted earlier that both Tesla and Tesla are assets preferred by similar, young, nontraditional investors. That connection was recently reinforced when it was revealed that Tesla had purchased $ 1.5 billion worth of BTC in the fourth quarter of 2020.
There is also growing interest from savvy institutional investors, although the group is still small. Nonetheless, Norges Bank, Norway's central bank, which oversees the world's largest sovereign wealth fund, revealed that it had bought shares in a number of EV stocks in the fourth quarter, including Tesla. Of course, Norges also gained value from Bitcoin in the process.
By February, Tesla had made more money from the value of its Bitcoin holdings than from actual car sales. When the cryptocurrency hit $ 60,000 last weekend, Tesla made more than $ 1 billion.
In early March, we made a bearish call to Tesla. We argued that the Palo Alto, California-based carmaker entered an earnings correction before its shares continued to rally.
We think that phase is now over and that Tesla & # 39; s upward trajectory is about to continue.
Tesla has been bouncing off the uptrend line since June and is about to complete a V bottom. It is very difficult to trade in a V bottom because the bounce is so fast that you can miss the trade. It is also difficult to determine when the pattern is complete.
By looking at the broader overview below, we can explain why we think the stock is about to complete a V bottom.
TSLA Daily, Broader View
The price has found resistance through the neckline of the H&S top. The map can be seen as a puzzle, containing various technical bottlenecks. Sometimes they all come together to form one coherent image, if you know how to recognize that.
The 200 DMA is aligned with the upward trend since the March floor. The price just exceeded 100 DMA; all it has to do is do the same with the 50 DMA, which would protect the previous record.
The RSI already completed its homegrown, showing that momentum is building, and the MACD's short MA crossed the long MA after reaching an oversold state.
Therefore, if the price crosses the $ 740 level, we expect it to hit the record – a closing price of $ 883.
Trading Strategies – Long Position Settings
Conservative traders should wait for the price to climb at least above $ 750, then return to establish a base above $ 720.
Moderate traders would go for a better price, if not for evidence of support, long after the price offers the same upward breakout and falls, as taking profits and perhaps going short.
Aggressive traders could enter at will, provided they understand the whole post and accept the added risk associated with their quest for higher profits if they don't wait for further confirmation. Money management is key.
Here is an example of a basic but related trade:
Trade Sample
Entry: $ 750
Stop Loss: $ 700
Risk: $ 50
Goal: $ 900
Reward: $ 150
Risk: Reward Ratio: 1: 3
