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Finance,  Technology

When to buy Tesla’s Stocks (TSLA) for a Profit? A technical analysis (March 2021)

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Note: The information in this article is NOT financial advice.

 

Outline

 

In what follows, a date will be given, after which Tesla’s stock (TSLA) price is likely to rise. Tesla’s stock (TSLA) prices are plotted against time. Each price point is the average of prices over a day, and the window represents a year. Indicators, such as Bollinger Bands, Volume, RSI, and MACD, will be used to infer when the stock price is likely to rise. (TD Ameritrade’s thinkorswim platform is used.)

Bollinger Bands

bollinger bands - tesla stocks
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When the Bollinger Bands are placed against the stock prices, a pattern can be observed. This pattern can be used to infer when the stock price is likely to rise and drop. When the stock price touches or crosses the lower band, it eventually hits or crosses the upper band after some time (see image), and vice versa. Sometimes, the price only needs to gets close enough to either the lower or upper band to observe this pattern (see image). When the midline or mid-band of the Bollinger Bands has a positive (upward) trend, the price tends to stay above the midline, and when the midline or mid-band has a negative (downward) trend, the price tends to stay below the midline (see image).

Volume

volume - tesla stocks
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When the price crosses, touches, or nears either the lower or the upper band, there is an uptick in the volume chart (see image). The uptick may occur slightly after the price crosses, touches, or nears the lower or upper band. By an uptick, we mean a rise in the volume, where the volume for the day before and the volume for the day after the uptick are lower than the volume that causes the uptick.

Relative Strength Index (RSI)

rsi - tesla stocks
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Roughly, when the price rises, so does the RSI, and it goes down when the price drops (see image). When the value of the RSI nears 30, the price tends to cross, touch, or near the lower band, and when the value of the RSI nears 70, the price tends to cross, touch, or near the upper band. When the price crosses the upper Bollinger band and stays above it for some time and the upper and lower Bollinger bands are wider apart, the RSI stays above the 70 line for some time (see image). The trend of the RSI graph tends to coincide with the trend of the midline of the Bollinger Bands.

Moving Average Convergence Divergence (MACD)

macd - tesla stocks
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When the price has a positive (upward) trend, the cyan line of the MACD is above the yellow line, the farther apart these lines are (or the more they diverge), the more positive the price trend is. When the price trend turns negative (downward), the cyan and yellow lines meet (or converge) and cross each other, and the yellow line is above the cyan line; the farther apart they are, the more negative the price trend is.

When to buy Tesla’s stocks (TSLA) for a profit?

buy order - tesla stocks
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On March 8th,2021, the Tesla’s stock price crosses the lower Bollinger Band, but the price had been touching the lower band a couple of days before that date, which caused an uptick in the volume the day before the 8th, which suggests a higher trading activity. The RSI value is below the 30 line on the 8th and starts to go up, which suggests high momentum. After the 8th, the yellow and cyan lines of the MACD start to converge; since the yellow line had been above the cyan line, the price trend is likely to be upward after that date. Indeed, Tesla’s stock price was below $600 a share on the 8th and rose as high as $709 a few days after (see image). However, since the trend of Bollinger mid-band is downward, the RSI has been going down incrementally, and the lines of the MACD are again converging, the price is likely to go down again; indeed, after March 19th, the price has dropped to $640. If this trend persists, the price may drop more until similar conditions on March 8th happen.

Last Words

Based on the patterns of the indicators, Tesla’s stock (TSLA) price is likely to rise after March 8th, 2021. However, the price may not rise too much because of the negative trend of Bollinger mid-band.






 

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