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Tesla Shares Failed To Hold Its 200-Day Simple Moving Average. Here’s How To Trade The Stock Now.


tried to breakout above its 200-day simple moving average last week but broke below it on Monday as CEO Elon Musk reduced his holdings. Musk sold nearly $7 billion shares between Friday and Tuesday according to regulatory disclosures. He must be protecting his need to own shares of Twitter.

It is not surprising that demand for Tesla automobiles is being hurt by inflationary pressures. Rising inflation is starting to cut consumer spending. Credit card balances are said to be at the highest level in more than 20 years. Consumer confidence is starting to decline as Americans begin to live paycheck to paycheck.

The stock set its all-time intraday high of $1,243.49 on November 4, 2021 and traded as low as $620.57 on May 24, 2022. This was a bear market decline of 50%. From this low Tesla rebounded by a bull market 51.6% rise to $940.82 on August 4, above its semiannual pivot at $900.00.

The Daily Chart for Tesla

Shares of Tesla fell below a death cross on May 27, 2022, when the 50-day simple moving average moved below the 200-day simple moving average. The stock is now above its 50-day SMA at $753.65 and below its 200-day SMA at $910.53.

There is a downtrend going back to November 4, 2021, and through the highs of January 4, 2022, and April 5, 2022.

There are two horizontal lines on the chart. The one in the middle of the graph is the semiannual pivot at $900.00. The lower one is the annual pivot at $673.68.

The Weekly Chart for Tesla

The weekly chart for Tesla is positive with the stock above its five-week modified moving average at $812.54. The 200-week simple moving average or ‘reversion to the mean’ is rising in green at $434.81. The 12x3x3 weekly slow stochastic reading is rising at 61.94. This reading was oversold during the week of July 1, 2022, at 16.37. Stochastics scale between 00.00 and 100.00 with a reading above 80.00 overbought and a reading below 20.00 oversold.

Trading Strategy: Buy Tesla on weakness to its annual value level at $673.68. Reduce holdings on strength to the downtrend which is at 1,065.94 on August 29.