Tesla's 6.22% Surge to $340.01 Forms Bullish Engulfing Pattern Signals Continued Upside Momentum

Candlestick Theory

Tesla’s (TSLA) recent 6.22% surge to $340.01 has formed a bullish engulfing pattern, suggesting continued upside momentum. Key support levels are identified at $320.11 (August 21 close) and $318.68 (August 21 low), while resistance aligns with the recent high of $340.25. A breakdown below $320.11 could trigger a retest of $310.78 (July 15 close), whereas a break above $340.25 may target $348.98 (August 13 high).

Moving Average Theory

The 50-day MA (~$330) is above the 100-day (~$325) and 200-day (~$315) MAs, confirming a bullish trend. The 50-day MA currently supports the price near $330, and a sustained close above $340.01 would strengthen this signal. However, the 200-day MA acts as a critical psychological floor; a breach could invalidate the uptrend.

MACD & KDJ Indicators

The MACD histogram has expanded positively, with the MACD line above the signal line, reinforcing bullish momentum. The Stochastic oscillator (KDJ) shows K at 85 and D at 78, indicating overbought conditions but no immediate reversal signal. Divergence between K and price (e.g., K declining while price rises) suggests caution, though confluence with other bullish indicators tempers this risk.

Bollinger Bands

Volatility has expanded as the price nears the upper band ($340.25), reflecting heightened buying pressure. The bands’ width suggests a potential consolidation phase if the price retreats to the mid-band (~$330). A sustained move above the upper band could signal a breakout, while a drop below the lower band ($319.69) would indicate a breakdown.

Volume-Price Relationship

Volume spiked to $31.5 billion on the 6.22% rally, validating the move. However, declining volume on subsequent sessions (e.g., $17.93 billion on August 21) may hint at waning momentum. A divergence between rising prices and contracting volume could signal a weakening trend, though current volume remains robust enough to support further gains.

Relative Strength Index (RSI)

RSI is at 75, confirming overbought conditions. While this historically correlates with potential pullbacks, Tesla’s strong fundamentals and bullish momentum suggest RSI may remain elevated. A drop below 60 would indicate weakening momentum, whereas a retest of 80 could trigger short-term profit-taking.

Fibonacci Retracement

Key Fibonacci levels from the recent low ($297.82, August 1) to high ($340.25) include 61.8% at $320.50 and 38.2% at $313.70. A pullback to $320.50 could see a bounce if supported by bullish candlestick patterns, while a breakdown below $313.70 would target $305.30 (July 24 low).

Backtest Hypothesis

The RSI overbought strategy (2022–present) reveals mixed short-term (3-day) performance (64.62% win rate, 2.48% average return) but stronger medium-term (10-day) results (67.69% win rate, 3.82% average return). Long-term (30-day) returns are muted (49.23% win rate, 1.11% average return), highlighting the need for timely exits. Integrating this with Tesla’s current technical setup—bullish moving averages, expanding MACD, and strong volume—suggests a medium-term hold (10–30 days) with tight stop-losses below $320.11.