Tesla's poor earnings this week have accelerated the recent bearish sentiment in the stock, & after such an event, it's often useful to look at the slower timeframes to see if this is merely a blip from which the stock can recover or if it is indeed the start of a major reversal.
This is where the VPA concepts of support and resistance come into play along with the Quantum accumulation & distribution indicator. Considering the monthly chart, Tesla bulls do appear to have some respite ahead as the price action is poised on relatively strong support at the $177 level. What's even more encouraging is we also have the support on the weekly chart.
What will also determine whether Tesla continues lower is the volume, which so far for January is light considering the spread of the candle. However, we do have to reserve judgment until month end.
By Anna Coulling
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Despite a laundry list of risk factors that include inflation and geopolitical events, retail investors have been pouring their money into US stocks, and in particular stocks such as Tesla, which alone attracted almost $10bn since the beginning of this year. We can see this level of volume on the weekly chart for the stock, along with the levels Tesla has to overcome if the price is to continue higher. In such circumstances, using volume price analysis will help to determine whether this retail cohort will be left stranded at the current level or whether it is indeed the start of a major reversal for the stock. The Quantum indicators that come into their own in these circumstances are a combination of the volume point of control and the accumulation and distribution indicator, where key levels are not only clearly marked on the chart, but the lines also thicken each time the level is tested, giving us a visual of...
https://www.youtube.com/watch?v=s8YEo5dDJqM
Volume price analysis is a universal trading and investing methodology and here it is in action on the silver futures chart.
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https://www.youtube.com/watch?v=b95ssPUkTHY
Support & resistance is a key element of classic technical analysis and one of the five pillars of volume price analysis. And when combined with support & resistance from both a price and volume based perspective will give traders and investors additional confidence in identifying whether a trend is likely to reverse or not....
