Even the most polarizing stocks form classical chart patterns sometimes. This is one of those times for Tesla (TSLA) . Before we get into the charts, it’s important to discuss the process of choosing to write about TSLA this week. As I talked about in the Pro Talks interview and in the white paper I wrote over the last few months, one way I find trade candidates simply is by combing through hundreds of stocks at a time. Yes, using specific screens can be very helpful, too, but no screen is perfect. In other words, oftentimes, the most comprehensive method to locate constructive trade set-ups is reviewing a big list and taking note of the charts that look attractive. Indeed, this isn’t perfect either. One reason is that the stock’s symbol often creates a bias – TSLA is a perfect example of this. That’s why I frequently intentionally do NOT look at the chart’s stock symbol while going through a long list. I want the chart, and only the chart, to be the factor that influences my decision to potentially buy or sell it. This is exactly how TSLA popped up. I noticed the attractive setup first; it only was after that I realized what stock it was. Daily bullish pattern Let’s start with the daily chart, since this is what first caught my eye. TSLA is close to completing a bullish cup-and-handle pattern. A breakout through the most recent high of $234 would produce an upside target near $286. A suggested stop loss would be in the $210-$200 zone, which comprises the low of the pattern’s “handle” and the 200-day moving average. Needless to say, TSLA is volatile, but given its history of big breakouts (and breakdowns), we wanted to profile it while the stock was still under key resistance.\ Key downtrend line on the weekly chart Zooming out to the weekly chart, TSLA has underperformed in 2024 (-7% year-to-date), but it also has been making higher lows since the start of 2023. That’s a constructive development. But for things to really improve, TSLA would need to punch above the low $260s to break a key downtrend line on this weekly log-scale chart . Thus, seeing the above potential breakout attempt come to fruition would have a meaningful impact on its longer-term trend, too. Two distinct trading phases Going all the way back to the stock’s inception, the price action has been defined by two distinctly different phases: Long bouts of volatile trading ranges (3) and substantial breakouts (2). The breakouts are crystal clear – they happened in 2013 and 2019. From this very long-term perspective, TSLA currently is in volatile trading range number three. It last made a new all-time high ($414) in early 2022 and still is considerably below that level. But TSLA does share one very important characteristic with the prior trading ranges that eventually led to major breakouts – the stock is making multi-year higher lows, which is the first step in potentially building a multi-year bullish formation. For any of this to play out, we’ll need to see TSLA start leveraging shorter-term bullish patterns first. It has a chance to do that now. -Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
