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Tesla stock eyes ‘meaningful upside’ rally, indicators signal

Tesla stock eyes 'meaningful upside' rally, indicators signal

Amidst a flurry of developments in the electric vehicle (EV) space, Tesla’s (NASDAQ: TSLA) stock has witnessed a sharp decline in recent weeks. 

The primary culprit behind this downturn is the intense price competition among automakers in China, igniting a price war that has eroded Tesla’s profit margins. As a consequence, Tesla’s stock has taken a hit, underscoring the pivotal role that the ongoing price war has played in this downward trajectory.

However, better days may be coming for the automaker’s shares, two important technical indicators suggest.

Renowned stock market analyst Jake Wujastyk has brought attention to a promising market indicator duo: the moving average convergence/divergence (MACD) and Relative Strength Index (RSI). 

Notably, Wujastyk emphasized that the combined RSI and MACD signal has consistently proven its reliability in predicting substantial price turnarounds for TSLA throughout 2023, the expert noted on August 22.

“This MACD & RSI signal has been pretty strong for meaningful upside reversals this year.”

– Wujastyk said.
RSI/MACD signal on Tesla chart. Source: Jake Wujastyk

As can be observed from the above chart, the MACD-RSI signal successfully predicted an upside price reversal for TSLA in two instances in 2023: at the start of the year and in May. The signal preceded a substantial price rally in the carmaker’s shares. 

Tesla stock price analysis

At the time of publication on August 23, Tesla’s shares were standing at $233.19, up 0.83% in the past 24 hours.

The EV giant saw its share price decline by more than 2.3% and 13% over the past week and month, respectively. During this 30-day period, Tesla’s market valuation plummeted by more than $80 billion.

TSLA 1-month price chart. Source: Finbold

Year-to-date, however, Tesla remains sharply up by over 115%.

The recent stock declines came partly due to Tesla’s two back-to-back EV price cuts in China amid the ongoing price war in the world’s largest auto market.

As expected, the cuts have weighed on the company’s profit margins supply. Tesla reported an operating profit margin of around 10.5% for the first half of 2023, down from 17% in the year-ago period. 

Tesla eyeing ‘investment opportunities’ in Ontario

Meanwhile, Tesla and Ontario officials from several government departments have met and discussed “investment opportunities” multiple times between 2020 and 2023, reports revealed on Tuesday.

According to internal documents, Tesla has been expressing interest to begin manufacturing in the Canadian province. The country’s officials view Ontario as “the ideal destination for Tesla” due to its strong automotive supply base, growing EV and battery supply chain footprint, clean energy, vast mineral resources, and more. 

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