TSLA: Mid Term Forecast: 28.03.2021 (Educational)

The main trick with forecasts using the long term candles such as monthly, you have to typically ignore the stock movements during the whole month and focus mostly on the closing days, when the next month candle is being printed. Sometimes, in the middle of the month, the weekly candles can give a false sense of the beginning of a rally just to cancel it on the very next week in order to obey the master – the monthly candle.

There are still three trading days in March and I would like to share the perspectives for TLSA by analyzing possible closures on March 31. I will talk about the signs I am seeing using the two approaches: the Candlesticks + Technical Analysis and the Elliott Waves theory.

Candlesticks + Technical Analysis

Monthly

In February TSLA closed the month with a very strong Bearish Engulfing candle that was well supported by the monthly RSI. The Engulfing comes with the over 80% odds and does not normally require a confirmation.
In the middle of March the monthly RSI moved down through the oversold level. At the same time, the monthly PSAR flipped bearish. If the March’s candle closes in three days below 619.00, the February low, this would increase the bearish odds to almost 100% and I would be expecting at least one more month of lower prices.

Weekly

Three weeks ago the stock produced a rather clean Bullish Engulfing, however, it was canceled the very next week. On March 26, the week closed with a red candle again, making the two consecutive closures below the weekly 20 EMA line. I would not be surprised if a weekly 8/20 bearish EMA cross happens the next week.
From other technical perspectives, the PSAR continues to stay on the bearish side and the RSI is in agreement with the price movements.
If the next candle closes as red and below the February low, the downtrend would be considered confirmed.

Daily

At the beginning of the last week, TSLA made an attempt to rally above the daily 20 EMA line. However, the attempt was rejected and all five days closed below the 8 EMA line. Based on the candles structure, I am not seeing a sign of recovery for now.
Both the 8 and 20 EMA lines have crossed the 100 MA. You also can see that the 50 MA is making a bearish curve, trying to cross the 100 MA. If it happens in the next 5-10 days, the bearish odds would definitely increase.
While the daily 200 MA line could be the next support line at approximately 510-540, I view that the weekly 50 MA at 450-470 is likely to provide such support.
MACD, Stochastics and RSI indicators support a continued move down.

ELLIOTT WAVES APPROACH

1. Lower Degree -> Higher Degree

The first approach is based on the analysis of a wave of a lower degree and a projection of the next wave based on the structure of the sub-waves (the marks on the Daily chart above).
I marked the first wave down as A. It breaks down well from the sub-wave and Fibonacci levels perspective. Wave B is a three-wave structure that retraces precisely 0.500 of the length of wave A.
If all assumptions are correct, a wave C is expected (the highest probability) to extend to minimum of 0.786-1.000 Fibs of the length of wave A. The next most typical extension would be 1.618. There is also an option for 0.618, but it is rather rare.
0.786 – $434
1.000 – $357
1.618 – $134

2. Higher Degree -> Lower Degree

This is the chart that I shared in my previous monthly outlook a month ago: https://investingangles.com/2021/02/27/tsla-mid-term-forecast-27-02-2021/

I continue to assume that TSLA completed its major wave (1) at 900.13 and I am measuring it from the time of IPO at all time low. Based on the length of wave (1), we can project the most common targets/retraces for the wave (2):
1. 548, 0.382 retrace of wave (1). That would be 29% off the top.
2. 444, 0.5 retrace, 51% down.
3. 340, 0.618 retrace, 62% down.
4. 192, 0.786 retrace, 79% down. This one is rarer, but not uncommon for a very volatile stock.

SUMMARY

Now we can compare the two target areas by two methods. I made it visual to simplify things and I view that we should expect the stock to retrace to:
434 – 340, 48%-62% off the top.

As I have sufficient data, I charted an operative channel for the stock movement. Based on the channel, I am expecting TSLA to hit the target area in the second half of April – the beginning of May.

There is a possibility of another swing higher for a more complex wave B (marked as Alt B), however the odds are rather low at this point, considering the positioning of the weekly and daily candles.

I would like to emphasize that this is a preliminary analysis that can change once the March candle is printed.

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