After a robust surge of 7.69% on Tuesday, Tesla, Inc. witnessed a modest decline in trading on Wednesday. This movement comes in the wake of a noteworthy development: a decline in U.S. job openings, a factor that has bolstered expectations that the Federal Reserve might opt for maintaining interest rates at their current levels in the upcoming month’s meeting.
The previous day’s trading session saw the electric vehicle (EV) behemoth closing at the 50-day simple moving average (SMA). As the trading progressed into Wednesday, Tesla’s stock exhibited consolidation near Tuesday’s trading range, forming what is known as an inside bar pattern.
An inside bar pattern signifies a phase of consolidation and is often followed by a continuation in alignment with the existing trend. Notably, this pattern holds more significance on larger time frames such as the four-hour chart or beyond. It involves a minimum of two candlesticks, comprising a “mother bar” (the initial candlestick) followed by one or more subsequent candles. The latter must be entirely contained within the range of the mother bar and are referred to as “inside bars.”
In instances of double or triple inside bars, the pattern’s impact can be amplified. Confirmation of the pattern’s recognition often hinges on observing elevated trading volume upon its breakout.
While the inside bar pattern on Tesla’s chart leans towards a bullish outlook, it’s noteworthy that continued resistance to the 50-day SMA might lead to a potential breakdown from the mother bar of Tuesday’s trading. Such a move could potentially elevate market volatility.
For traders aiming to capitalize on potential volatility, MIAX’s SPIKES Volatility products offer an avenue. These products are traded on the SPIKES Volatility Index.
Analyzing Tesla’s Chart and Trends
Tesla’s chart reveals that the developing inside bar pattern is positioned near the upper bounds of Tuesday’s trading range. This configuration lends itself to a bullish outlook, suggesting the likelihood of continuation on Wednesday or the following day. A bullish breakout from the mother bar could pave the way for Tesla to regain the 50-day SMA, bolstering confidence among bullish traders.
Furthermore, Tesla’s stock is currently riding an upward trajectory, characterized by a sequence of ascending highs and lows. Notably, the most recent higher low materialized on August 24 at $228.18, with the latest confirmed higher high standing at $240.82 on August 22.
In the event that Tesla reclaims the 50-day SMA and sustains its upward momentum within the established uptrend, there exists a gap spanning between $280.93 and $289.52 that is likely to be filled. Should this materialize, the stock could potentially encounter temporary resistance at the upper boundary of the gap, providing an attractive opportunity for short entry.
Looking ahead, Tesla faces resistance levels at $265.10 and $271.71, while support is anticipated at $254.98 and $234.35. As the intricate dance of market dynamics continues, Tesla remains a focal point for traders and investors alike, navigating the terrain with a blend of technical patterns and broader market influences.
