Tesla (TSLA) shares ended January with a 4.3% decline. Over that month, prices made three unsuccessful attempts to breach the $450 threshold. The downtrend that started after hitting a new all-time high in December continues to weigh on the company’s stock. The daily chart reveals quotes gradually falling below local lows, confirming that sellers remain in control. Their next target may be the round level of $400.
The Relative Strength Index (RSI) has recently entered neutral territory, offering no clear directional bias. Meanwhile, the Moving Average Convergence/Divergence (MACD) indicator is stuck in the negative zone, showing no signs of a potential reversal. Alongside the downtrend line, the 50-day exponential moving average (EMA50) is another hurdle for TSLA’s rebound. At the same time, the EMA200 is now approaching the $400 threshold and may act as a solid support. Given this technical picture, bears should consider taking profits on their short positions.
Elon Musk’s recent comments and Tesla’s annual report have introduced uncertainty regarding its outlook. The company’s CEO announced a strategic pivot from electric vehicles (EV) to autonomous taxis and robot manufacturing. The first step in this transition will be to cease production of the famous Model S and Model X. The freed-up factory space will be used to build Optimus robots. At the end of the day, investors have never viewed the tech giant as an automaker, but the entrepreneur's public statements still surprised many.
On the one hand, Tesla's decision to quit the EV market doesn't come as a shock, given the fierce competition from Chinese counterparts; on the other, the self-driving taxi segment is a pretty small part of the business, and the Optimus project is still in development. The CEO may finance the firm’s ambitious transition with capital from SpaceX's future IPO. However, in this case, investors are likely to prefer SpaceX shares as Musk's flagship project, leaving Tesla in the shadows.
Take a look at the following trading plan:
Sell TSLA between $415 and $435. Place Take profit at $400. Set Stop loss at $450.
This content is for informational purposes only and is not intended to be investing advice.
