Tesla (TSLA) Stock Price and Forecast: Why will Tesla stock fall?

Tesla stock notched another day of gains, up a modest 1.3%.
TSLA shares now have seen gains over 50% since October.
The EV maker announces some price increases for Model 3.

Ivan Brian FXStreet

Tesla has yet to retreat from its lofty perch, but with a host of options expiries today, surely it cannot be too far away now. For those of you who have ridden this impressive rally, congratulations, but please have some form of trailing stop in place to bank some profits in the event of a turnaround. Options and obviously call options have been the main driver of the move in Tesla shares with huge buying of the $1,000 and $1,200 strikes expiring today. The shares have also benefitted from the increased focus on climate change and clean energy. This has been heightened with the recent G20 climate meeting in Rome and the COP26 summit in Glasgow. Tesla obviously is the clean energy, electric vehicle sector leader so was rightly benefiting, but has it gone too fast too furious? Certainly 50% plus in just over a month seems overdone in this author's opinion, and the Relative Strength Index (RSI) tends to agree with me.

Tesla (TSLA) graph percentage gain, 15-minute

Tesla (TSLA) stock news

The uncertainty with Hertz was making for some good copy earlier in the week with Elon Musk tweeting that the Hertz deal had no effect on Tesla's economics and that no deal had been signed. Reports overnight from the Wall Street Journal seem to contradict this, with the WSJ article reporting that Tesla and Hertz are trying to work out how quickly they can get deliveries through. This story clearly has some more legs to it. Separately, news overnight also out is of a price rise for Tesla Model 3 and Model Y cars with Tesla increasing the price of both by $1,000. Companies are under increasing pressure in relation to supply chain issues, and Tesla faces additional costs and supply issues in relation to semiconductor chips. This is not a good sign for the Fed's "inflation is transitory" message, but that is another argument.

As an aside, the rivalry between the two richest men on earth saw further battles yesterday as a Reuters report stated, "A federal judge on Thursday rejected a lawsuit by Jeff Bezos' space company, Blue Origin, against the U.S. government over NASA's decision to award a $2.9 billion lunar lander contract to rival billionaire Elon Musk's SpaceX."

Tesla (TSLA) stock forecast

Coming back down to earth even if the Tesla share price is in the stratosphere, the performance is beginning to slow, leading us to believe the trend is for turning. The options contracts as mentioned roll-off today, so that could lead to a bit more selling pressure and certainly less buying. Thursday also saw a bearish candle with a long wick, a so-called shooting star. We remain bearish and see $1,120 and $1,000 as supports. Above $910 this baby can still fly even though that is now some 36% lower. On a longer-term horizon, that is the breakout point. Staying above keeps Tesla bullish in a longer-term trade. The short term is more dictated by the $1,120 second price explosion. Below that it is short-term bearish.

TSLA 1-day chart

Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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