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4 , utilizing the Elliott Wave Precept (EWP) and technical analyses, I discovered that the Tesla (NASDAQ:) bears had fumbled the ball:
“… because the share worth is now again above $625, its 50-day SMA, in addition to the downtrend line that has saved the April bounce excessive in examine. …. It follows that when TSLA trades above the 50d SMA and its ‘cloud,’ the chances are for good issues to occur, i.e., greater costs, enhance. Simply have a look at the twond half of 2020.“
Moreover, again then, I discovered the Tesla’s weekly chart confirmed:
“how worth .. stalled twice on the blue 38.2% retrace of (blue) Major wave-III. Once more, it is a typical 4th wave degree. The technical indicators … are additionally beginning to level again up, with some encouraging developments. Thus, if the Could low can maintain, the bulls are in management, and the rally to $1,200 has began.“
Quick ahead, and Tesla is now buying and selling within the low 1000s. Thus, the popular forecast of a lot greater costs was appropriate. It’s now time to evaluate whether it is value chasing up right here or not. For that, I’ll use the weekly and month-to-month candlestick charts. See Determine 1 beneath.
Determine 1: TSLA weekly and every day candlestick charts with EWP Rely and Technical Indicators:
The weekly chart in Determine 1A reveals the extra worth motion since my replace June 25 replace. Tesla bottomed exactly on the 38.20% retrace of (blue) primary-III: traditional 4th wave conduct (blue Major IV). Furthermore, the rule of alternation in EWP is fulfilled, as a result of wave-II and IV had been two totally different patterns: flat vs. zigzag, respectively. Thus, I have to logically conclude primary-V is now underneath manner. Moreover, the technical indicators are all pointing up however getting comparatively overbought. Subsequently, a multi-week pullback needs to be anticipated quickly earlier than the worth strikes greater but once more. Lastly, the worth is driving the higher Bollinger band – it has energy and is above its necessary easy transferring averages (SMAs), which is a powerful uptrend. Please be aware the weekly MACD is just not making new highs and that divergence have to be monitored.
The month-to-month chart in Determine 1B reveals the identical EWP depend primarily based on month-to-month (reversal) candles. Additionally right here, we are able to see the picture-perfect wave-IV backside and wave-V is now underneath manner. Apart from the cash circulate index (MFI14), all technical indicators are pointing up.
As well as, Tesla’s worth is nicely above the rising 20-month and 50-month SMAs, whereas sitting on the higher Bollinger band: long-term strong uptrend. Thus, I want to look excessive and count on $1,200 to be reached, however the MFI is telling us this uptrend is from a liquidity perspective, which is presently not sturdy. Since liquidity drives markets, it helps the notion that the present rally is a extra appreciable 5th wave.
Each charts present that when Major V completes, an infinite cycle wave has concluded, and we should always count on Tesla to drop again to round $300+/-200 throughout a multi-year bear market. Sure, I do know, which will sound almost unattainable. However please keep in mind, the EWP was already foretelling in June of a possible rally to $1,200. And right here we’re. Furthermore, we additionally know with certainty that after wave-1 comes 2, then 3, 4 and 5. And when the 5th wave completes, count on a extra in depth correction. Wave-4 got here and went, so right here is wave-5. And this wave-5 will most certainly finish a multi-year cycle-degree wave. So we should logically count on a multi-year cycle-degree bear market after that. Plain and easy.
The one bullish case I could make is that I’m off by one wave diploma. That can finally lead comparatively quickly to a major correction, a giant rally and nonetheless that final cycle-degree bear market. Nevertheless, the best way we slice and cube it, the large unhealthy bear is inevitable.
Disclosure: I’m lengthy Tesla.
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