Tesla stocks break out from converging triangle

As anticipated in the previous forecast, Tesla shares experienced a sharp drawdown after releasing the company’s quarterly earnings report. However, the price drop was limited by the level of $300 and the ascending trend line that originated from the May low of $270. This line, combined with the downtrend from spring’s peak of $367.5, formed a converging triangle that saw a decisive breakout during yesterday’s trading session. Exiting the triangle may provide Tesla buyers with sufficient momentum to test $355 and $365.

The quotes, along with the upper boundary of the triangle, also broke through the 61.8% Fibonacci retracement ($332). Meanwhile, the RSI and other technical indicators are quite far from the overbought zone, showing no obstacles to further upside potential. However, the upper shadow candlestick pattern on the daily chart appears slightly concerning. The number of traders looking to take profits is increasing alongside Tesla's rising share price. Improved market sentiment could not have come at a better time to support upward momentum.

On Monday, Donald Trump extended the deadline for imposing higher duties on Chinese goods for another 90 days, through November 10. This is positive news for Tesla, as the company mostly purchases batteries from the Asian country. Lower costs are particularly favorable, while the firm continues to face challenges with selling electric vehicles. However, the situation is constantly improving.

Tesla has officially confirmed that Texas regulators have approved to commercially launch its driverless taxi service. The company now gets the chance to compete with such sector giants as Uber and Lyft, with the key distinction of being driverless. According to Elon Musk’s projections, nearly half of the US population could use this new service by the end of 2025. While some may consider these statements to be overly optimistic, Tesla is ready to monetize another innovation, which should have a positive impact on Tesla’s financial results.

Consider the following trading strategy:

Buy TSLA at the current price. Take profit 1: $355. Take profit 2: $365. Stop loss: $320.