Tesla, Inc. has experienced a period of extreme volatility, but the action in its stock has been relatively predictable. This is why it’s a key stock to watch.
Recent Price Movement
The stock recently hit resistance and reversed off the $359 level. This reversal was not a coincidence, as there tends to be resistance at price levels that had previously been resistance. This phenomenon occurs due to buyer’s remorse, where investors who bought shares at a certain price and then saw the price fall, decide to sell when the price rallies back to that level.
Buyer’s Remorse
In the case of Tesla, some investors bought shares at around $359 in February, only to see the price fall soon after. When the stock rallied back to $359 in May, these remorseful buyers placed sell orders to get out of their positions at breakeven. The large concentration of these orders created resistance at the $359 level, causing the stock to reverse.
Support Levels
The stock has now found support around $285, which is also not a coincidence. There tends to be support at former support levels, as well as at levels that had previously been resistance. In early June, $285 was a support level, and when the stock dropped back to that level, remorseful sellers who had previously sold at that price placed buy orders, creating support.
Seller Remorse
Support can also form at a price that had been resistance due to seller remorse. In March and April, $285 was resistance for Tesla, and when that resistance was broken, some sellers regretted their decision. When the stock dropped back to $285 in June, these sellers placed buy orders, causing support to form.
Lessons from the Chart
The chart of Tesla teaches important lessons about trading. Resistance can form due to buyer’s remorse, while support can form because of seller’s remorse. Knowing where these important levels are can help traders profit. By understanding the psychology of buyers and sellers, traders can make more informed decisions and anticipate potential price movements.
Key Takeaways
- Resistance can form due to buyer’s remorse
- Support can form because of seller’s remorse
- Knowing important price levels can help traders profit
- Understanding the psychology of buyers and sellers is key to making informed trading decisions
About Tesla’s Stock
The stock’s recent price movement and the formation of support and resistance levels make it a interesting stock to watch. As the stock continues to fluctuate, it will be important to monitor these key levels and adjust trading strategies accordingly.