Tesla Stock Price and Forecast: TSLA drops on Bitcoin woes and targets key support

Update: Tesla stock drops 2% in early Monday trading as the Bitcoin investment it made looks to be a headwind now for the stock as the crypto leader is driving lower. Many crypto stocks are lower in Monday's session and Tesla now must be grouped in with them to some extent given its investment in the crypto currency. At the time of writing Tesla shares are trading $610.78, down 2%. Ford (F) also calls out TSLA saying a drag race challenge between the Model S Plaid and the Mustang Mach E is a good idea.

Tesla stock outperformed on Friday in a strong session with most of the volume skewed toward the higher end of Friday's range. While the broader market suffered its second day of post-Fed rate talk blues, Tesla has put in two solid days that have seen its stock price move from $593 to $623 since Wednesday. $667 remains the short-term pivot, and momentum is now favouring a move to test this level.

Tesla statistics

Market Cap: $600 billion

Price/Earnings: 617

Price/Sales: 19

Price/Cash Flow: 87

Price/Book: 26

Enterprise Value: $596 billion

Total revenue: $35.94 billion

Tesla stock forecast

The recent attempts to take out the $539 low failed and set Tesla stock on an upward trajectory since the middle of May. This was just as well given the vacuum of volume below $539. A break of that level and the move likely accelerates to sub-$500 pretty quickly and the bear target zone. This would be a nice spot to try some fresh longs if it were to trade down there. For now, all is rosy in the garden of Tesla stock with $667 being the short-term pivot that Tesla bulls are aiming to take. This will clearly end the series of lower highs and set up a push higher. Above $715 things could accelerate again due to the lack of volume above this level.

For now, the risk-reward favours trading from the long side, but it is not yet strong enough in this author's opinion for new positions. The momentum oscillators – Relative Strength and Commodity Channel Index (RSI and CCI) – are trending higher with price. The short-term moving averages – in this case 9 and 21-day – are flatlining, but the Tesla stock price is just trading above them. Waiting for a break of $667 or $539 will have a stronger risk-reward.

Breaking either $539 or $667 will be strong moves and should see the Tesla stock price accelerate, so an option strategy could work well in this instance. Buying a $670/$530 strangle could work well. A strangle is an options strategy in which a trader buys an out-of-the-money call and buys an out-of-the money put to benefit from a bullish or bearish breakout.