Tesla stock analysis: Is a further upside possible?

The charts suggest Tesla remains in a strong uptrend

Tesla Model 3 and model X at Brussels Motor Show                                 

Tesla’s market capitalisation soared above $1trn for the first time on 25 October. With the rise, the carmaker joins the trillion-dollar club whose members are Amazon, Alphabet, Apple and Microsoft. Facebook, whose market cap had hit $1trn in June of this year, has since dropped out of the elite group as its market cap slipped to $926.72bn as of 25 October.

Tesla’s share price received a boost on 25 October on the news that Hertz plans to revamp its electric vehicles (EV) rental fleet in North America by placing an initial order for 100,000 Teslas by the end of 2022.

According to Bloomberg, the deal will fetch $4.2bn for Tesla with the delivery anticipated to be complete within the next 14 months. This deal marks the largest-ever purchase of electric vehicles.

Morgan Stanley’s Adam Jonas reiterated an overweight rating on Tesla with a target price of $1,200. Jonas believes that Tesla’s recent quarterly results have shown “extraordinary” top-line growth and “industry-leading profitability” even as chip shortages are hurting the car industry.

According to Yahoo Finance, the consensus analyst share price target for Tesla is downbeat at $732.87. Will Tesla’s stock go up and surprise analysts or will it face profit-booking at higher levels? What do the charts suggest? Read our TSLA stock analysis to find out.

Tesla share price technical analysis: weekly chart

Tesla’s stock price rallied to a new all-time high last week, rising above the previous all-time high of $897.68 made in January of this year. This move indicated the resumption of the uptrend.

The bullish momentum picked up further and pushed the price to a new all-time high of $1,041,28 on 25 October. This has propelled the relative strength index (RSI) above 80, indicating that the rally may be overextended in the short term.

Tesla has a history of strong rallies. The previous two up moves stalled after the RSI had risen close to 85 levels. Hence, the overbought reading on the RSI cannot be taken as a signal of a reversal.

If the stock sustains above $897.68, the next target objective on the upside is $1,252.29. The first sign of weakness will be a break and close below $897.68. Such a move will suggest that markets have rejected the higher levels. The stock could then drop to the 20-week exponential moving average (EMA). 

Tesla share price technical analysis: Daily chart

Tesla’s stock price followed the all-time high on 22 October with a sharp rally on 23 October. This has pushed the RSI above 88, which has previously resulted in either a short-term correction or consolidation.

However, this pause in the rally is unlikely to signal a trend reversal. For that to happen, the bears will have to sink and sustain the price below the breakout level at $897.68.

The bulls are likely to have other plans and will attempt to flip the breakout level at $897.68 into support. If they manage to do that, the uptrend is likely to resume.

The 20-day EMA is the key level to watch on the downside because a break and close below it will suggest that the sentiment has turned negative and traders are not buying the dips. That could result in the start of a deeper correction. 

Tesla stock: Buy or sell at these levels?

Tesla’s share price analysis shows that bulls are firmly in the driver’s seat but the rally is overheated in the short term. That could result in a minor consolidation or correction in the next few days. If bulls do not give up much ground, the rally may extend to $1,252.29 on the upside.

The views and opinions expressed in this article are those of the author alone and do not constitute trading advice. Trading and investing involve substantial risks, and you should always do your own research or contact your financial advisor before arriving at a decision. Never invest more than you can afford to lose.

Trade Tesla stock: Tesla shares price

Tesla Inc
Daily change
1068.61
Low: 1068.61
High: 1113.06

Further reading: Tesla hints it may start accepting crypto payments again

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