TSLA breaks below 20-day moving average for the first time since April 3rd
Tesla Inc. (TSLA) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, TSLA finished the month 32.5% higher at 1430.76 after losing $56.73 (-3.81%) today, notably underperforming the Nasdaq 100 (1.78%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 1471.00, Tesla confirmed its breakout through the previous session low after trading up to $50.02 below it intraday.
Daily Candlestick Chart (TSLA as at Jul 31, 2020):
Friday's trading range has been $96.07 (6.34%), that's slightly below the last trading month's daily average range of $114.56. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently significantly lower than usual for TSLA.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. Additionally, two candlestick patterns are matching today's price action, the Last Engulfing Bottom Pattern which is known as bullish pattern and one bearish pattern, the Black Candle. The last time a Last Engulfing Bottom Pattern showed up on March 13th, TSLA actually lost -18.58% on the following trading day.
After trading down to 1420.98 earlier during the day, the share bounced off the key technical support level at 1429.50 (S1). The failure to close below the support might increase that levels significance as support going forward. The stock closed below the 20-day moving average at 1489.74 for the first time since April 3rd. After having been unable to move above 1513.24 in the prior session, the market ran into sellers again around the same price level today, missing to move higher than 1517.05.
Though TSLA is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might accelerate should prices move below the nearby swing low at 1366.54 where further sell stops could get activated.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for Tesla. Out of 422 times, TSLA closed higher 58.53% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 54.98% with an average market move of 1.83%.