• Tesla shares suffer again on Monday as the tech sector struggles.
• TSLA looks to be on autopilot for $500.
• TSLA shares have support at $539 as a first target.

Tesla shares continue their march lower post the Q1 2021 earnings release. The results were not bad but the manner of the revenue generation is what investors worried over. Tesla gained significant revenue from environmental credits and trading in Bitcoin. Not core to its business model and not what investors want to see. They want revenue to come from increasing margins and sales.

Further pressure was heaped on Tesla with the most recent sales numbers from China also disappointing investor expectations.

Many investors are also now wondering if Tesla has poked the bear, so to speak, and may end up being a victim of its own success. All legacy carmakers have announced plans to commit to a fully electric future. The majority of legacy auto manufacturers have targeted 2030 for this transition. While Tesla pioneered the whole electric vehicle sector it faces huge competition from legacy automakers going forward.

While many seem to take pleasure in the demise of Tesla’s share price it should be noted that in 2020 Tesla appreciated by 743%. A slight pullback is therefore not to be unexpected.

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Tesla (TSLA) stock forecast

Tesla is still on course to go sub-$500 with a pit stop at $539 on the way. Friday’s price action was strong though with a 3% gain. The key level to hold is clearly the well-watched 200-day moving average at $584. A break of this and it is down to $539 and then sub $500. For now, that still looks the most likely outcome as the trend remains firmly bearish. Early indications from the first hour of Monday’s trading are that Tesla is again under pressure and has broken this $584 200-day moving average.

Some respite though was seen on Thursday, as both the RSI and CCI signaled oversold levels, and Tesla duly obliged with Friday’s rally. Both of these indicators have now moved back to neutral levels. In order for Friday’s rally to continue, Tesla needs to break $624, the 9-day moving average. But only on a break of $667 does the bearishness, that has engulfed Tesla since April, firmly end.

$539 remains the first target and then a test of the sub-$500 consolidation 1 area identified on the chart. This is a pretty decent support zone. A long period of price consolidations in the middle of a strong upward move.

MACD and DMI remain crossed into bearish territory. 

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