Tesla shares fell 2.9% to $805 15 minutes after the open on Friday. This places the stock below the always significant 200-day moving average at $814, which could make $730 the new downside target. This comes a day after the EV leader plunged 11%. All three major indices are down, and the tech-heavy NASDAQ has lost 0.3%.

Tesla (TSLA) shares dumped heavily on Thursday as investors reacted poorly to the latest set of earnings. Tesla closed a huge 11.55% lower at $829.10 in what was one of the heaviest daily losses suffered since Elon Musk announced his share sale plan on Twitter. TSLA is a high beta stock, meaning it offers high volatility, but even this reaction to what was actually an earnings beat surprised most. Of course, Tesla stock is caught in the crosshairs of sellers as rotation out of growth names continues.

TSLA bottomed out at $879 after the release, but in reality it spent very little time down there. This is interesting to us on a technical view as it prints a higher low than Monday's sell-off and puts in place the potential for a bottoming formation. From the 4-hour chart below we can see this price action in play. The lows from Monday at $855 are our short-term pivot. Above there things have a chance to turn bullish in a more medium-term view. Below and it is on to $813 to test the 200-day moving average.

Tesla approached key support from the 200-day moving average at $814. This is a key level for all stocks, and Tesla has not been below it since August of last year. A break and it is on to $730 as the next major support. $685 is the point of control and a huge volume profile support.

If Tesla can recover, the stock should head to $945 as the first target, where the 9-day moving average. However, more selling is likely. Tesla has created a lower low than the previous $886 mark and so has confirmed the downtrend.

TESLA Takes a Bullish Reversal From Lower TL

Jan 30 2022

Stop Loss -6.94%

Holding time 5d2hr

281.14

Entry price

261.62

Stop loss price