The share price of electric vehicle (EV) manufacturer Tesla (NASDAQ: TSLA) could be setting up to extend its recent rally, with technical indicators suggesting investors should anticipate a possible breakout.
Notably, Tesla has capitalized on the near-term stock market momentum to establish its price above the $220 support zone. Over the past week, TSLA has gained over 5%, trading at $230 as of the latest market close.
TSLA one-week stock price chart. Source: Finbold
Central to the upcoming rally is the equity’s formation of a wedge pattern, which appears set for an upside breakout if supported by favorable fundamental catalysts, a stock trading analyst with the pseudonym Jonalius suggested in a TradingView post on September 15.
The analysis posits that if Tesla breaks the $240 resistance level, the move could pave the way for a rally toward $300 or more.
“We are basically on the edge of breaking out of this triangle and potentially going for an all-time high retest, which from our current price of about $230, that’s almost about 80% upside, and that may not even be the biggest part of this long term rally that could be cooking right now for Tesla,” he said.
TSLA stock price analysis chart. Source: TradingView/Jonalius
According to the expert, the current chart formation resembles two previous breakouts in 2017 and 2019. In January 2017, Tesla surged by 85% in a few months after an extended consolidation. At the same time, in 2019, the pattern resulted in TSLA recording a whopping 2,500% increase over two years, marking a historic bull run for the company.
Overall, Jonalius expressed confidence that Tesla is approaching another similar moment, with the stock currently holding above critical support levels on the monthly chart.
On the other hand, the analyst observed that the Traders Dynamic Index (TDI) backs the bullish outlook, which he described as a “money-making cheat code” for identifying long-term opportunities. The TDI, which combines the Relative Strength Index (RSI) with moving averages, indicates the possibility of an imminent rally for Tesla.
Furthermore, Tesla’s Moving Average Convergence Divergence (MACD) indicator, which has exhibited consistent selling pressure for nearly 900 days, is turning bullish. According to Jonalius, the MACD is showing early signs of a reversal, potentially signaling the end of Tesla’s prolonged downtrend and the start of a new phase.
Tesla stock price target
Looking at possible price targets, the expert noted that if Tesla breaks above the $240 resistance and maintains momentum, the stock could rapidly rise to $300, $400, or even higher. Additionally, leveraging Fibonacci retracement, the analyst identified long-term targets of $414, $608, and potentially $987.
However, Jonalius also cautioned about downside risks, warning of a possible 35% correction if Tesla fails to break out of the wedge and drops back to the $150 level.
In the meantime, another stock market commentator, Mr_Derivatives, noted in a post on X on September 15 that Tesla appears to be establishing a possible breakout, with a near-term price target of $246.
The stock’s trading backs this projection within a symmetrical triangle pattern, a technical formation suggesting a possible move in either direction. Key resistance around the $245 level has been tested but not yet decisively breached.
TSLA stock price analysis chart. Source: Mr_Derivatives
Tesla’s key fundamentals
While technical indicators suggest a bullish outlook, Tesla’s fundamentals also support a potential long-term rally. For example, Jonalius pointed to several key developments, including the potential for interest rate cuts, which could boost Tesla’s sales by making financing more affordable.
Tesla’s product pipeline is also packed with innovations, including the anticipated Robotaxi, a refreshed Model Y, and a more affordable $25,000 vehicle set for release in 2025. The company’s highly profitable energy business and upcoming Tesla semi truck production ramp support the bullish case.
Indeed, the product lineup could come as a relief, considering that Tesla has been impacted by the general slowdown in EV market demand. However, the company seems to be leading the recovery, with recent data indicating that in July, EV registrations increased by 18%, primarily driven by the Tesla Cybertruck and new models.
Meanwhile, some analysts maintain a bullish outlook. For example, Deutsche Bank’s Ed Yu gave Tesla a buy rating with a $295 price target. According to his projection, Tesla is not merely an automaker but a tech firm poised to reshape multiple industries.
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The post Tesla stock is ‘on the edge of breaking this wedge’ to the upside appeared first on Finbold.
