The most famous electric car company stock is in serious trouble. Why? There’s only been 3 waves up off the IPO. Blue Primary A, B, C. Why? Because the current price decline has now overlapped with the 2014 price high and 2016 price high. This overlap with these former price high means that the current decline can’t be a 4th wave of the same degree as 4th waves in impulse, per Elliot wave theory, do not overlap. In addition, the rally of the July 2017 low, which found support at the typical 100% extension, also only hit the 161.80% extension, whereas it normally would rally to the 200% extension for a typical 5th wave (black dotted arrow). Thus, that last rally didn’t really suffice as a typical 5th wave and the current decline can’t therefore be a 4th wave of either the major or primary degree. Hence, all that’s left is a large (blue) A, B, C up. Con’t below chart.
Figure 1. TSLA weekly candle stick chart.
The rally of the blue primary-B low, which is a classic 50% retrace of the prior Primary-A rally btw , fell well short of how a typical 3rd wave should behave and how far it would normally travel: to $410 at a minimum as then the length of wave 3 equals the length of wave 1, measured from the wave-2 low (in this case, add the length of wave-A to start of wave-B: $140+$270.
What I anticipate to happen, based on the current overlapping price action, is for wave Primary-A to bottom in the $200-$240 zone. Than a rally to $300-$320 zone, followed by a strong decline to $125-$20… I know that’s a large range, but there’s simple no data yet available to forecast this C-wave (there’s not even a B-wave underway!) and thus we need to go by the extensions we can typically expect for c-waves: c=a to c=1.618x a).
Bottom line, TSLA may be running out of steam… uhhh electricity… as the weekly chart is not looking healthy with strongly overlapping price action. Since Elliot wave is all about the probabilities of possibilities, the only viable bullish alternate I see for know is if the whole advance off the IPO low is large diagonal triangle wave (green up arrows). Such diagonals consist of 5 overlapping waves; A, B, C, D, E and thus it would mean wave-D is now underway. It would need to find support at around the lower green trendline, now at $240. A break below that line will put this thesis into seriuous question. For now, all the weekly technical indicators (TIs) are pointing down, wanting to see lower prices. Price is right at the purple 200w SMA and a break and close below it can be considered as a bearish sign.