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Tesla Inc (TSLA) is one of the pioneers in electrical vehicles. It is also deeply involved in clean energy products including battery energy storage and solar energy. Tesla has continuously improved the software ecosystem of its electric vehicles to revolutionize driving via autopilot. With more emphasis on climate change and demand for green energy, Tesla is expected to stay competitive in the next decade.  TSLA is listed on Nasdaq and is a component of the Nasdaq 100 and S&P 500 under Consumer Discretionary.

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TSLA is in an unfolding Wyckoff distribution phase.

The price started in May 2021 with a bullish structure where higher lows were formed. It broke above the axis line of $250 on 24 Sep 2021. This was followed through with a Wyckoff sign of strength (SOS) rally. In fact, the price was very bullish and did a climatic run-up to reach $414 on 4 Nov 2021 accompanied by increased volume. This point, later on, proved to be a Wyckoff buying climax (BC). The following reaction on 9 Nov 2021 with a big spread bar and spike of volume suggested a Wyckoff change of character. Therefore, the large volume earlier could be distributed on the way up. These characteristics are suggestive of phase A of Wyckoff distribution.

The price then attempted several times to rally up. However, the pullback of each rally resulted in lower lows and lower highs. The inability to rally up is hinting at bearishness. The up bar on 24 Feb 2022 broke below the axis line of $250 before closing higher, suggesting the presence of demand. A significant sign of strength rally followed and it was the best rally since October 2021 yet it still formed a lower high suggesting more weakness ahead. The price slid all the way in the largest down wave forming Wyckoff sign of weakness (SOW) to test the $210 level. There was increased volume suggesting more supply.

A final rally brought the price to the range of $310 but the price could not commit above it. Another leg of a sign of weakness followed to retest the $210.

On 7 Nov, the price slipped through the $210 level with a localized increase in volume. This is characteristic of the Wyckoff last point of supply (LPSY). Further distribution follows. The huge spike of volume on 13 Dec with relatively smaller progress to the downside may suggest the presence of some demand as more effort did not result in a big price drop, showing Wyckoff’s efforts vs. results.
 

Bias

Bearish. According to the Wyckoff trading method, TSLA price would temporarily see some relief from the bear. However, the price structure is certainly in phase D of Wyckoff distribution and more down move is expected. The next reasonable support would be around the $100 to $150 range.

If the price is able to stay above $150, TSLA would likely range between $150 and $210. Recent volatility in the market makes it hard to find winning stocks. In spite of that, there are techniques that the Wyckoff method could help pick these winning stocks.

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