Shares of Tesla (NASDAQ :), electric vehicle maker, hit a new record Friday, closing at $ 1,650.71 after both Bank of America and Morgan Stanley put their ratings ahead of Palo Alto. , California-based automaker.
Bank of America increased the stock from Hold to Buy and Morgan Stanley, which had downgraded the stock in June as a result of the growing US-China trade war, increased the Sell rating to Hold. In addition, Bank of America nearly doubled its price target from $ 800 to $ 1,750, reasoning that the higher the stock goes, the easier it is for Elon Musk to get financing at low cost, whether the company is meeting all of its production targets or not.
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In addition to the stock's appeal, Tesla announced a 5-for-1 split last week that would make the increasingly expensive stock – which nearly quadrupled in value this year – more affordable to retail investors who have an interest in the stock. company, something that tends to ramp up the stock further, upon renewed demand.
Techniques not only support Bank of America's new price level, but imply a much higher target, $ 2,294.
The trade completed a falling flag, optimistic after rising $ 844 in the two weeks between June 29 and July 13. The reason why the flag is falling? Lucky traders paid.
But the positive outbreak was made by new bulls, who also want to reap the kind of yields of early bulls. The breakout at the top shows that buyers are willing to increase their bids to find new, willing sellers at higher prices.
The flagpole – the jump before prices varied within the body of the flag – is the implicit target of the flag's breakout. Therefore, a rise of USD 644 from the breakout point of USD 1,460 suggests a price target of USD 2,294.
However, watch out for Thursday's High Wave candle – a sign of bewilderment – followed by a little Hanging Man, a possible forced long wind-up setup, which would be confirmed with a lower close. Should a confirmation follow today, it would suggest the high likelihood of a return move to retest the pattern, which coincides with the bottom of the rising channel.
A successful display of demand would drive prices towards our goals.
Trading Strategies
Conservative traders must wait for evidence that the uptrend remains intact, via a pullback that successfully confirms the integrity of the two cartridges, the falling flag and the rising channel, proves again.
Moderate traders can wait for the supposed buy dip, but not necessarily for confirmation of the trend.
Aggressive traders may enter a contrary short position in an attempt to capture the downward movement before entering the rest of the market in the sustained upward trend. It is advisable to wait for the confirmation of the Hanging Man.
Contrarian Trade Sample – Aggressive Short
Entry: $ 1,650 – at a meeting following a lower-closing Hanging-Man confirmation
Stop Loss: $ 1670 – Above the Hanging Man
Risk: $ 20
Objective: $ 1550 – above the recent congestion on top of the psychological number of $ 1500
Reward: $ 100
Risk: Reward Ratio: 1: 5
