Trend line watchers, pay attention! In the wake of electric vehicle manufacturer Tesla’s (NASDAQ:TSLA) second quarter 2024 earnings disappointment, Tesla stock investors could be headed for persistent problems. Your best bet is to use Tesla resistance levels to chart a possible path to recovery — or discover a reason to get out while you still can.
To recap, Tesla’s Q2 2024 net income declined 45% year over year. Investors clearly weren’t prepared for this, and it shows in the charts.
With that in mind, let’s look at the hurdles that traders must clear in the near term.
Tesla Needs Time to Take Out Resistance at $255
Tesla’s investors really shouldn’t complain too much, as the stock drifted along at $180 before a massive pre-earnings rally. Clearly, the run up to $271 and change was a case of “too far, too fast.”
As a result, investors face the threat of further downside because of a deep “air pocket,” a zone that could cause a steep drop, all the way back down to $180. Just like a plane going through turbulence, a few bumps could drop Tesla shares down hard.
Furthermore, even if you’re bullish about Tesla stock, it has a long way to go before it can reach the $255.77 and $271.10 resistance levels. Shares are currently trading near $231.
In other words, it’s fine to aim high, but Tesla’s shareholders need to be realistic.
It’s the summer, and trading volumes could remain low for a while. Hence, in the coming weeks, investors should focus on constructive price action and avoiding complacency.
The Tesla Stock Monthly Chart Says Recovery Is a Long Ways Off
We just looked at the daily price chart for Tesla stock, but this doesn’t tell the full story. When we pull back to a longer time frame with the monthly chart, it’s clear that Tesla investors have a lot of catching up to do.
If you thought getting back to $271.10 would be challenging, you’re in for some bad news. That resistance level marks the start of what is a much, much longer journey. After that, the next hurdles to clear for TSLA stock will be around $300, $315, $385 and $416.
There’s an important lesson to be learned here.
Just looking at a short-term time frame can create a deceptive impression. If you were to look at just the daily chart, you might think Tesla had an easier shot to defeat resistance levels and take out its 52-week high. However, the monthly chart shows a slightly different story. This shows how important it is to view resistance levels charts on more than one time frame: daily, weekly, monthly and so on.
And again, let’s be realistic here. $400 is a long way off. Just getting Tesla stock back to the $270 range and then to $300 will be crucial victories for the buyers.
Tesla Resistance Levels: Wait for a Break and Then Buy
Tesla’s disappointing quarterly earnings report did a lot of technical damage. Now, the bulls have to hope that the sellers are exhausted.
Playing catch up isn’t easy, but it can be profitable if you play your cards right.
In other words, keep an eye out for breakthroughs above the aforementioned Tesla resistance levels. A break above resistance in the coming weeks would be a buying signal — and the more levels that are broken, the better.
So, there’s no need to rush and buy shares now. Instead, investors should wait for resistance-level breaks on strong volume as buying opportunities.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
