Tesla (TSLA) Stock Price and Forecast: Tesla flags three reasons why it will break higher

Tesla has stalled recently after the strong move in late June. The move kicked off by breaking $635. We had identified this as a potentially explosive move as the volume profile showed just how thin the volume was above $635. This meant a break would result in resistance fading away and helping power the move. This worked out perfectly as Tesla charged through the level and ended the day, June 23, up over 5%. Since then the move has largely stabilized. Again we have to take credit for identifying this as the volume profile identified a lot of volume between $667 and $715, meaning Tesla would find it hard to make gains. Friday saw that continue to play out as the stock closed barely changed at $678.90, a small gain of 0.14%. 

From the chart above we can see the sideways volume since the move above $667 as Tesla consolidates. Technical analysis would generally favour a continuation of the trend, so bulls will be hoping this is what plays out. Overall, so far so good as Tesla is now up over 18% for the last month. 

Tesla released delivery data on Friday that was the cause for the initial spike higher, which was swiftly rejected. Delivery numbers were good with 201,250 vehicles delivered in the quarter. This was a record number of deliveries for Tesla and more or less in line with analyst forecasts. Deutsche Bank had pared its forecast from 203K to 200K, and the average of analyst forecasts was 201k. 

Bank of America said in a note on Monday that Tesla may require new capital to drive more capacity for further increases in deliveries for 2021. RBC says the worst may be over for production issues due to chip shortages, while Wedbush says with a strong second half Tesla should deliver 900,000 vehicles in 2021. 

Tesla key statistics

Tesla stock forecast

Tesla remains in a consolidation phase and has formed a bullish flag formation. The breakout should see Tesla finally break the $715 level, and a similar situation exists here as it did with the $635 level. Volume profile on the right of the chart shows a significant decrease above $715, meaning the price could accelerate sharply once through $715. Less volume means less resistance. Again a smart options play could take advantage of this. Buying a $750 call for July 23 costs approximately $10 per share (option contract is 100 shares) and a strong move would see the volatility as well as price move in favour. 

Three reasons then why the move should or could continue:

1. Trend has stalled but formed a bullish flag formation. Look for a breakout above $700.

2. Volume is thin above $715, so the move could accelerate.

3. Above $667 Tesla remains bullish. A break lower, and all bets are off.