My Tesla Technical Analysis With Candlesticks

Candlesticks are a visual representation of the size of price fluctuations, the opening price, closing price, day high and day low. Traders also use these charts to identify patterns and gauge the near-term direction of a stock’s price. I use candlestick charts to help determine my trades. I have been doing well with my Tesla trades and I would like to show you what I see for the possible near-term future of Tesla stock moves. In the long term I feel Tesla will move up nicely this year (2025).

All candlestick charts in this presentation are one day candlesticks. One candlestick per day.

My Near-Term Vision With Candlesticks

I have two candlestick patterns I’m looking at to help me determine where I feel Tesla will go this week. One of the candlestick patterns is a “Hanging Man” and the other is an “Inverted Hammer.” We will look at the Hanging Man first.

Hanging Man

The Hanging Man will appear at the top of an uptrend. It is a reversal indicator. When you see a Hanging Man at the top of an uptrend, many times the stock will reverse and start moving down. Notice I say “many times.” Technical analysis is not science! Take a look at this illustration of a Hanging Man Candlestick below. It shows a reversal in the stock’s direction. This Hanging Man candlestick can be red or green.

 

When you think you see a Hanging Man, or any other reversal pattern candlestick, then you must watch for a confirmation candlestick the following day. The candlestick after the reversal candlestick will help confirm if there will be a reversal or not. Below is an illustration showing the confirmation candlestick (see number 5). You see after the confirmation candlestick the stock continues down.

Now we will look at an “Inverted Hammer” candlestick.

Inverted Hammer

The Inverted Hammer will appear at the bottom of a downtrend. It is a reversal indicator. When you see an Inverted Hammer at the bottom of a downtrend, many times the stock will reverse and start moving up. All reversal patterns need a confirmation candlestick, or two (one and two days following the reversal candlestick). This illustration below shows the Inverted Hammer (in the oval) and it is followed by a tall green candlestick which is a confirmation of a reversal.

Now that we understand what a  “Hanging Man” and a “Inverted Hammer” candlesticks are, let’s take a look at the actual candlesticks from my Tesla candlestick chart off of my trading platform.

Below is the Tesla candlestick chart. The last candlestick is a Hanging Man which was Tuesday, Dec. 17th. 2024

Tesla Hanging Man

The large red arrow shows the Hanging Man Candlestick which I look at as a possible reversal candlestick. Also look at the small white arrow. It shows a Hanging Man pattern candlestick, however, the next day did not confirm that there would be a reversal. The stock continued up.

The next picture below is the same candlestick chart I took the next day which has the confirmation candlestick. This confirmation candlestick, with the red arrow, is Wednesday, Dec 18th. 2024.

Tesla Confirmation Candlestick

After seeing a Hanging Man candlestick, this confirming candlestick is what you look for. This confirms there is a reversal and the stock might move down.

This picture below is from Friday, Dec 20th. 2024. This is three day after the Hanging Man reversal candlestick and the stock is still moving down. Now we want to know where the stock will go on Monday. It’s a pretty strong downward movement. But look at the last candlestick, it’s an Inverted Hammer (red arrow). Is this the end of the downward movement and start moving up? Or will it continue down? We will not know until Monday’s close.

Tesla Inverted Hammer

 

Other things I will look at on Monday.

1 I will look for a confirmation Candlestick. This will be a strong Green Candlestick.

2 If Monday is a red candlestick it means the stock is continuing to move down.

3 I will watch the Relative Strength Index (RSI). At the close on Friday it was down below 70 at 60.75. Much of the time Tesla has been above 70 along with many tech stocks. 70 normally indicates an overbought situation. If Tesla moves down on Monday and goes down into the 50 area I think we will get another reversal candlestick.

On Wednesday the FED Chair Powell made comments that the market was not happy with. Wednesday, Thursday and Friday were not good days. His comments were a blow to our Santa Claus rally, however, I feel it was a healthy pullback that was needed.

My Mistake With Tesla

On Wednesday, the day after the Hanging Man candlestick, Tesla opened up. I took this as a sign that there would be no confirmation of a reversal and the stock would continue up. I felt Powell was gonna announce a rate cut, which was expected, but along with the rate cut he also made “problem causing” comments. When Tesla opened higher on Wednesday I jumped the gun and got into Tesla Calls too early thinking I was gonna get in at a low price and look like a genius. It was a mistake and I might lose a few grand because of it. We must be disciplined and wait for all the signs. If Monday Tesla moves up my Calls might work out. If Tesla has another bad day the stock might not recover before my Expiration day of Jan 17, 2025. Clearly I hope this Inverted Hammer gets confirmed as a reversal candlestick and Tesla continues up. Let’s watch to see how I do with these two Tesla Calls. Let’s see if I made a big mistake getting in before confirmation of a reversal.

I hope this little explanation of watching for reversals with candlesticks helped. You can email me any questions you might have.

Successful trading,

Steve

The Options Coach