Using Windows to Interpret TSLA Stock’s Latest Bearish Moves
TSLA stock has been selling off pretty consistently since the beginning of the year. You TSLA bulls likely see this as a buying opportunity, but I am eagerly watching the chart waiting for the right time to buy puts :)
TSLA closed almost 4% down today (Friday 1/12), and I regret not buying puts yesterday!
Seeing as the stock has been successfully testing support around our current price levels (at least over the past few months), I’d rather wait for a any correction back up to appear to be exhausted before jumping in and buying puts. Or at least, that’s what I keep telling myself. The problem is, I’ve been waiting for a slight correction back up and it hasn’t happened yet!
With that being said, IMHO TSLA bulls need to be watching their baby right now, because the stock appears to be on the trajectory to continue testing new lows for the year.
YES, it’s been the norm for the stock to trade at these prices over the past few months, so what makes this any different? WELL the stock is down when others are up. NVDA and META for example are up for the year and they had AMAZING 2023’s. Clearly, “the market” is more confident in these overbought stocks than TSLA, at least for right now :/
What’s super interesting at the moment is that within a matter of TWO days, the support level at ~ $234 (which the stock was floating around but never closing below) back in late Nov / early Dec BROKE, and as of today, the “window” that had been opened (on the gap-up day in mid-November) was ALSO closed. Both signals shout BEARISH to me, but I still want to wait for a better time before I take a position.
The rest of this article is devoted to exploring windows (AKA gaps) seen in TSLA’s stock chart since April, because IMHO looking at how this stock has been performing lately will help me determine when to jump in and buy puts (or calls!).
A Quick Note About Windows / Gaps
Depending on how you look at charts, you may love using windows or you may hate using them. I think everyone can agree that a gap up day (or a rising window) is a good sign, and a gap down day (or a falling window) is a bad sign. At least for those particular trading days :)
Technically (according to Nison in Japanese Candlestick Charting Techniques) support levels can be found in rising windows in the gap that occurs between two consecutive candles. After a close below the bottom of the (rising) window, support at this level is not “in play” anymore. The same can be said about falling windows (future resistance can be found in the gap, and any potential resistance at this level is negated with a close above the top of the gap).
Windows/gaps in TSLA’s Candlestick Chart Since April
The rest of this article is dedicated to a closer look at TSLA’s stock moves after windows have been created (and after they ultimately close):
April 20 Gap Down
June 9 Gap Up
July 3 Gap Up
July 20 Gap Down
August 21 Gap Up
September 11 Gap Up
September 21 Gap Down
October 19 Gap Down
November 2 Gap Up
November 14 Gap Up
TSLA Candlestick Chart (4/20 Gap Down)
Continued Descent After the Gap
4/20 was a gap down day, and the stock continued to descend in price over the next 4 trading days until it began to rally.
Closing the Window
This window closed on 5/19, and if you took a bullish position in the stock on this day, you would have been in the green.
TSLA Candlestick Chart 6/9 Gap Up
Continued Ascent After the Gap
After the window on 6/9, the stock continued to climb over the next 7 trading days before it began to correct.
Closing the Window
While the correction in late June tested the window, support continued to hold near the top of the window. The stock rallied after that, and then corrected again, and it was on this correction that the window from 6/9 ultimately closed. After the window closed on 8/15, the stock continued to descend over the next 3 trading days before it began to rally again.
TSLA Candlestick Chart 7/3 Gap Up
Continued Ascent After the Gap
The stock struggled to make further gains after opening a window on 7/3, running out of steam after one more trading day, with a price correction back down into the gap.
Closing the Window
While the window held as support throughout this correction in early July, it was quickly closed after a gap down day on 7/20 (which was also a gap down day). The stock continued to descend after this window was closed.
TSLA Candlestick Chart 7/20 Gap Down
Continued Descent After the Gap
The stock continued to descend after the gap on 7/20. While prices appeared to stall out for a few days at the bottom of the candle that formed on 7/20, the price didn’t rally enough to even test the bottom of 7/20’s window.
Resistance at this window has continued to be in play since then.
TSLA Candlestick Chart 8/21 Gap Up
Continued Ascent After the Gap
The gap up day on 8/21 likely slipped by, without much notice, as the stock had been on a decline prior to, closing two more windows from gap up days prior. Buying in at this time may have been a crazy idea, but support for this stock actually held tight at the top of the candle which formed this gap up day on 8/21, with any “correcting” movements barely even bringing the stock down.
Closing the Window
The candle on 10/20 closed this window. A short-lived rally occurred the following two days, after which the stock continued its bearish move.
TSLA Candlestick Chart 9/11 Gap Up
Continued Ascent After the Gap
After the gap up day on 9/11, the stock struggled to achieve higher prices, with most candles closing within the candlestick pattern that formed on 9/11.
Closing the Window
This window closed on 9/21, and the stock continued its bearish descent for 4 more days before rallying again.
TSLA Candlestick Chart 9/21 Gap Down
Continued Descent After the Gap
The candle that formed on 9/21 formed a gap down day (in addition to closing a previous window). The stock continued its downwardly trajectory for an additional 4 more days before rallying again.
Closing the Window
This window closed on 10/10. However, the stock actually continued to decline after this (instead of rally, as would have been expected with a close above this window)! The candle that formed the following day (red, with a close slightly below the close on 10/10, a bearish sign) was an early warning of the losses to come, which more than likely slipped by without much notice from most traders.
TSLA Candlestick Chart 10/19 Gap Down
Continued Descent After the Gap
After the gap down day on 10/19, the stock continued to fall for 7 more days before it began a new rally.
Closing the Window
Although this window closed on 11/15, a new trading range formed (pretty much around the top and the bottom of this “closed” window). The stock tried (and failed) two more times to maintain prices above the top of this window, once in late November and again in mid-December. While the mid-December rally may have excited some traders, it didn’t last for long.
TSLA Candlestick Chart 11/2 Gap Up
Continued Ascent After the Gap
After the gap up day on 11/2, the stock continued to rally for a few more days before correcting. The correction was short-lived, as the corrections ended at the top of the window.
Tug-of-War Upcoming!
With the bearish trajectory TSLA stock has been on lately, it will be interesting to see how the stock holds up when it begins to test this window!
TSLA Candlestick Chart 11/14 Gap Up
Continued Ascent After the Gap
The stock gapped up on 11/14, and support above the top of the window was tested multiple times and held shortly after. The rally in late December which likely excited a lot of traders was quite short-lived as the stock quickly ran out of steam and has been on a bearish decline for basically all of January to date.
Closing the Window
This window closed today (1/12)!
What to Expect In January?
The trading range ($217 — $243) seemed to define where a lot of TSLA stock’s support has been coming from over the past few months, and only a few more days of bearish moves will take the stock under this range.
Personally, I believe there’s a small chance that this stock will see a huge rally after this. 10–20%, maybe. But more than that? It would have to clear $300 first before I consider it.
It’s probably going to keep playing around in its trading range, annoying both bulls and bears alike. Which is why I have had to sit on my hands all day, staring at these charts trying to make sense of them. I decided to buy MSFT calls instead :P
How the stock performs as it tests $217 or even its lowest (recent) window, IMHO will be the most important to watch. The stock has already seen a pretty bearish January, so as oversold as it might be at this time, the bulls are clearly more interested in other stocks right now.
Happy trading!
