TSLA Elliott Wave Insight: A Bullish Path AheadTechnical Analysis of TSLA Based on Elliott Wave Theory
Overview
Based on the Elliott Wave Theory, we observe that TSLA has commenced a fresh impulse wave from the bottom of January 2023. This new wave marks the beginning of wave I in the red cycle degree, which concluded at the peak of July 2023. Following this, wave II in the red cycle degree began moving downward and concluded at the bottom of April 2024. It is crucial to note that wave II did not retrace beyond the start of wave I, confirming that the Elliott Wave principles have been adhered to. The bottom of wave I was at $101.43, and wave II concluded at $138.86, which is within the acceptable range.
Now, wave III in the red cycle degree has started its upward journey, which is expected to show significant strength and momentum. Typically, wave III can extend up to 161.8% of wave I, implying a strong bullish trend.
Subdivision of Wave III
Within wave III in the red cycle degree, there are five subdivisions expected, labeled as wave ((1)) to ((5)) in the black primary degree. Currently, we have embarked on wave ((1)) in the black primary degree, which itself should also subdivide into five smaller waves labeled wave (1) to wave (5) in the blue intermediate degree.
- Wave (1) and Wave (2) in Blue Intermediate Degree: These waves have already been completed.
- Wave (3) in Blue Intermediate Degree: We are likely in the early stages of this wave now.
Characteristics of Wave III
Wave III is often the longest and most powerful wave in the Elliott Wave sequence. Here are some key characteristics and signs to watch for:
1. Momentum and Strength: Wave III usually exhibits the strongest momentum and covers the most distance in the shortest time compared to waves I and V.
2. Volume Increase: There is often a significant increase in trading volume, reflecting heightened investor interest and confidence.
3. Impulsive Nature: Wave III is impulsive, meaning it moves in the direction of the larger trend. This is often driven by fundamental news and investor sentiment.
4. Extension: It is common for wave III to extend, reaching up to 161.8% of the length of wave I.
5. Subdivisions: Within wave III, there should be clear five-wave subdivisions in lower degrees, following the typical Elliott Wave structure.
Roadmap and Invalidation Level
The roadmap for TSLA suggests a bullish trend ahead, supported by the structure of the waves and the characteristics of wave III. The key invalidation level to watch is $138.86. As long as this level is not breached, the bullish outlook remains valid.
- Wave III Target: Ideally, wave III could extend to around 161.8% of wave I.
- Key Invalidation Level: $138.86. If TSLA breaks below this level, it would invalidate the current wave count and necessitate a reassessment of the wave structure.
Conclusion
The Elliott Wave analysis of TSLA indicates a strong bullish trend with the commencement of wave III in the red cycle degree. This wave is expected to show substantial strength and momentum, with a likely target near 161.8% of wave I. As long as the invalidation level of $138.86 holds, the bullish bias remains intact. Investors and traders should watch for the key characteristics of wave III and monitor the wave subdivisions closely to confirm the ongoing wave structure.
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