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Potential value play: Massive cup and handle on Tesla targets $765

Tesla rose alongside SpaceX on Friday, continuing its rise from Thursday after tailwinds from a potential peace deal between the US and Iran.

The chart is now looking very interesting as Thursday’s low looks like a retest of a potential “handle” of a year long cup and handle formation.

For now, markets appear to be risk-on because of the expected signing of the MOU, or memorandum of understanding, by Friday.

The MOU is expected to lay the framework for a potential US-Iran peace deal and the reopening of the Strait of Hormuz. If this lowers geopolitical risk and eases oil pressure, high-beta stocks like Tesla could continue to benefit from stronger risk appetite.

TSLA

In addition, the Tesla-SpaceX merger narrative gained fresh fuel when CNBC asked SpaceX president Gwynne Shotwell about speculation that both companies could eventually merge.

Shotwell said a merger “might make Elon’s life a little easier” and added that there was “no question” future synergies exist between Tesla and SpaceX. Markets took this as a positive signal for the wider Elon Musk ecosystem.

This is also a signal that markets are increasingly looking at Tesla through a broader lens, including AI, robotics, autonomous driving, energy storage, manufacturing scale, and potential overlap with SpaceX.

So while there is no confirmed Tesla-SpaceX merger, the market now has more reason to keep pricing the “Elon premium” back into Tesla.

Tesla’s larger cup and handle structure remains in focus, with the neckline around $488.5 and the measured-move target near $765.

TSLA

Currently, Tesla is retesting the $365-$380 breakout zone of a descending channel/the potential handle with $412, $445, and $488.5 acting as the next upside levels.

Should the price of Tesla break above the $488.5 zone and hold, we could be seeing the early stages of the cup and handle pattern playing out.

The measured-move target would be around $765, which is close to a 56% gain from the neckline area.

Before that, Tesla still has local resistance levels to clear. The first area to watch is around $412. After that, the next resistance is around $445. Then comes the bigger neckline near $488.5.

Zoomed in, we can also spot an oversold signal on the Stochastic RSI which is supportive for bullish reversals.

But, if Tesla loses the $365-$380 zone, the bullish retest becomes weaker. In that case, price could fall back towards the prior consolidation zone around $300-$320.

For now, Tesla remains a potential value play rather than a confirmed breakout.

Author

Zorrays Junaid

Zorrays Junaid

Alchemy Markets

Zorrays Junaid has extensive combined experience in the financial markets as a portfolio manager and trading coach. More recently, he is an Analyst with Alchemy Markets, and has contributed to DailyFX and Elliott Wave Forecast in the past.

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