How We Bought Tesla On A Pullback After Its Massive Breakout

$TSLA breakout

Tesla recently zoomed 29% higher over a 3-day period, then provided a low-risk pullback entry for swing trading. Continue reading for a clear and concise walk-through of how we bought TSLA just in time for another round of gains.

In the November 5 issue of The Wagner Daily report, we alerted subscribers to a potential pullback buy entry in Tesla (TSLA) with the following technical commentary and chart:

“There is one new official setup for Tuesday in TSLA. We like the big volume gap up, followed by the light volume pullback that stopped short of touching the 10-day MA.

Our entry is over Monday’s high with a stop one point below Monday’s low. The target area is $380 – $400 area.”

$TSLA daily

The massive breakaway gap above resistance on October 24, along with the follow-through rally the next day, really made the TSLA chart stand out.

Most importantly, that huge upside move was confirmed by an impressive volume surge both days.

Specifically, both days posted gains of more than 9% on volume that was 300% greater than average!

The combination of such bullish price and volume action should grab every trader’s attention, as it is a sign of mutual funds, hedge funds, and other institutions putting big money to work (institutional accumulation).

However, after a monstrous 29% gain over a three-day period, the price was too extended in the near-term to establish a position.

Still, that powerful advance generated a confirmed buy signal that simply required some patience to wait for a low-risk entry point to emerge. 

Pullback & Go!

As clearly explained in last week’s blog post about pullback trading, wealways look for orderly price action and lighter volume when a strong stock corrects from its high.

As shown on the chart above, an orderly, lower volume pullback occurred in TSLA from October 29 to November 1.

Volume dried up considerably on November 1, which was a bullish signal that suggested the pullback may have ended.

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Disclaimer: Past results are not necessarily indicative of future results. There is a high degree of risk for substantial losses in trading securities. All data and material on this website and/or ...

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