$TSLA Long Term Elliott Wave Update After Nasty Wave 2

### TSLA Elliott Wave Update — July 30, 2024

**Overview**

Tesla Inc. (TSLA) has been a focal point in the financial markets, with its stock displaying significant volatility and capturing investor attention. Recently, TSLA underwent a remarkable bullish run, which seemed to be an impulsive Wave 3 movement according to Elliott Wave theory. This upward move saw the stock price surge from approximately $168 to $272. However, this rally faced a setback following the company’s earnings report, leading to a noticeable correction.

**Elliott Wave Analysis: Current Structure**

Elliott Wave theory, a popular technical analysis tool, suggests that market prices move in predictable patterns. These patterns are composed of five waves in the direction of the main trend (Impulse) and three waves in the opposite direction (Correction). In TSLA’s case, the recent price movement can be identified as follows:

1. **Wave 1:** The initial surge from $168 to $272, a strong impulse wave, indicated bullish sentiment and market optimism.
2. **Wave 2:** The subsequent correction post-earnings report, which saw TSLA’s price pull back to the $210–$215 range, aligning with a typical corrective wave in Elliott Wave theory.

**Key Support and Resistance Levels**

The correction phase, identified as Wave 2, found significant support around the $210–$215 level. This area was critical, as holding above it suggested that the correction might be a temporary pullback rather than the start of a more prolonged downtrend. In Elliott Wave terms, Wave 2 corrections often retrace a portion of Wave 1, typically not exceeding 61.8% to 78.6% of the prior move. For TSLA, this retracement aligns with the $210–$215 range.

To confirm the end of Wave 2 and the beginning of Wave 3, TSLA needs to overcome a few critical resistance levels. The primary focus is the $240–$245 range, which corresponds to the 78.6% Fibonacci retracement level of the previous decline. This level is pivotal; clearing it could signal the completion of Wave 2 and the start of a new impulsive phase.

**Outlook: The Potential for Wave 3**

If TSLA can successfully break above the $240–$245 resistance zone, the stock could be set for another major move. The subsequent resistance at $260 would be another crucial level to watch. Surpassing $260 with strong momentum could confirm the beginning of Wave 3, the most powerful and extended wave in the Elliott Wave sequence.

Wave 3 is typically characterized by strong buying pressure and can often exceed the length of Wave 1. For TSLA, this could potentially propel the stock to new highs. The projected target range for Wave 3, based on Fibonacci extensions and historical price patterns, lies between $375 and $400. This range represents a significant upside from current levels, suggesting a potential 50% to 70% increase in price if the wave unfolds as anticipated.

**Risk Factors and Considerations**

While the Elliott Wave framework provides a structured approach to forecasting potential price movements, it is essential to consider external factors that could impact TSLA’s stock. These include:

1. **Macroeconomic Conditions:** Broader market trends, interest rates, and economic data can all influence investor sentiment and stock performance.
2. **Company-Specific News:** Earnings reports, product announcements, and management changes can lead to volatility.
3. **Sector Trends:** The performance of the electric vehicle (EV) sector and changes in regulations or consumer preferences can also impact TSLA’s price trajectory.

Investors should remain cautious and consider these factors alongside technical analysis. The stock market is inherently unpredictable, and while patterns and theories can guide decisions, they are not guarantees of future performance.

**Conclusion**

TSLA’s recent price action appears to fit well within the Elliott Wave framework, with a clear Wave 1 and subsequent Wave 2 correction. The key levels to watch are the $240–$245 and $260 resistance zones. A successful breakout above these levels could signal the onset of Wave 3, potentially driving the stock towards the $375–$400 range.

As always, investors should use a combination of technical analysis, fundamental analysis, and market sentiment to make informed decisions. While the potential for significant gains exists, so do the risks, making it crucial to approach the market with a well-rounded perspective and sound risk management strategies.