Tesla’s Q2 Deliveries Ignite Stock Rally: Will Resistance Level Halt The Climb? – Tesla (NASDAQ:TSLA)

Resistance at a Former Peak?

There can be resistance at a price that was previously a peak or top because of buyer’s remorse. Some of the traders and investors who purchase shares at the top come to regret doing so when the price heads lower right after they buy. They believe they have made a mistake.

Many of them decide to sell their positions. But they don’t want to lose money. As a result, when the stock eventually rallies back up to the price they bought their shares at, they place sell orders. If there are enough of these orders placed at the price that had been a peak, it can cause resistance to form at the level again.

This is why Tesla hit resistance at the same price level in December as it did in September of last year. If the shares make it back to levels around $263.50 there is a good chance there is resistance there again.

Is Tesla (TSLA) Headed Lower?

Sometimes when stocks can’t break resistance and keep moving higher, they roll over and head lower. This is also due to psychology.

Some of the investors and traders who created the resistance with their sell orders become anxious. They know that the buyers will go to whoever is willing to sell at the lowest price. Because they are worried about missing the trade, they reduce the price at which they are willing to sell their shares.

Other anxious sellers see this and do the same thing. And it could result in a snowball effect that pushes the price lower.

When applied correctly, technical analysis reveals the psychology behind supply and demand. Tesla’s chart clearly illustrates some fundamental market principles.

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Image created using artificial intelligence via Midjourney.