Tesla Short Trade Setup - Key Levels Approaching!
Hello Traders, Here is a short trade that I am planning to take if the right conditions arise.
First off, I'm sharing this setup for educational purposes. Please only take trades that you are comfortable with.
Alright, onto the trade setup...
This is a trade that I've been eyeing for the past week or so, with Tesla approaching a breakout of the prior range highs at $315 we may get a potential short trade opportunity.
To understand why I am taking this trade you have to understand that the broader market is very bearish at the moment.
- Yes Tesla has had a nice run, however eventually the Bearish nature of this market will catch up to Tesla and will eventually take it much lower in prices.
- Knowing this, I can take a short trade at key resistance levels, knowing that there is a high probability that Tesla will reverse and trend lower.
Of course nothing is 100%, however I would say that Tesla heading in the near future is a high probability.
***Trade Setup***
1) I will be entering "Short Entry #1" at the resistance level of $325
2) IF price continues higher up to the descending trendline, I will enter "Short Entry #2" at around $347. (Price changes depending on where it hits the trendline)
***Profit Taking***
There are 2 ways to approach this...
Method 1) You can take full profits at the trendline marked "Take Profit"
Method 2) You can take 1/2 at the trendline and the other half at the range lows. (You would use a trailing stop to protect your position and cash in nice profits if price reverses.)
- I almost always use a version of method #2 (however if something unexpected occurs or I become unsure of the market I may opt to take full profits at a particular level.)
Remember, this is a swing trade, to take trades like this you have to be comfortable with staying in positions for weeks at a time. If you're a novice and have yet to master your emotions, a swing trade setup like this might not be for you.
- If you aren't comfortable with a trade like this, I would recommend paper trading as practice first.
Thanks everyone and best of luck trading.
First off, I'm sharing this setup for educational purposes. Please only take trades that you are comfortable with.
Alright, onto the trade setup...
This is a trade that I've been eyeing for the past week or so, with Tesla approaching a breakout of the prior range highs at $315 we may get a potential short trade opportunity.
To understand why I am taking this trade you have to understand that the broader market is very bearish at the moment.
- Yes Tesla has had a nice run, however eventually the Bearish nature of this market will catch up to Tesla and will eventually take it much lower in prices.
- Knowing this, I can take a short trade at key resistance levels, knowing that there is a high probability that Tesla will reverse and trend lower.
Of course nothing is 100%, however I would say that Tesla heading in the near future is a high probability.
***Trade Setup***
1) I will be entering "Short Entry #1" at the resistance level of $325
2) IF price continues higher up to the descending trendline, I will enter "Short Entry #2" at around $347. (Price changes depending on where it hits the trendline)
***Profit Taking***
There are 2 ways to approach this...
Method 1) You can take full profits at the trendline marked "Take Profit"
Method 2) You can take 1/2 at the trendline and the other half at the range lows. (You would use a trailing stop to protect your position and cash in nice profits if price reverses.)
- I almost always use a version of method #2 (however if something unexpected occurs or I become unsure of the market I may opt to take full profits at a particular level.)
Remember, this is a swing trade, to take trades like this you have to be comfortable with staying in positions for weeks at a time. If you're a novice and have yet to master your emotions, a swing trade setup like this might not be for you.
- If you aren't comfortable with a trade like this, I would recommend paper trading as practice first.
Thanks everyone and best of luck trading.
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