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Tesla bulls capitalized on a 'classic glass bottom': trader

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Tesla (TSLA) stock has recently stalled under the $700 price level as it consolidates for its next move. Meanwhile, one Wall Street trader is pointing to its recent "glass bottom" chart formation as a sign that Tesla bulls are starting to show signs of life.

Recently, on Yahoo Finance Live, Michele Schneider, partner and director of trading research and education at Marketgauge.com, broke down the particulars of this classically bullish pattern. She said that in May, Tesla stock fell below $600 per share, probing the $550 level, which had been its prior support in March. 

Importantly, this was the lowest price level in 60 days, but price action quickly confirmed investor participation. The day after shares hit a price low, Tesla managed to close above the high of that reversal day, signaling a potential bottom when combined with the fresh 60-day low.

Tesla (TSLA)
Tesla's "glass bottom".

"That was really an amazing opportunity to get into Tesla because at that point you had about a $30 risk — which for a stock trading with that type of volatility is really good. It's like having a $2 risk for [a stock] like Apple (AAPL)," said Schneider.

After the bounce, Tesla rallied to the key $700 price level where it pulled back and began consolidating. Schneider said that a break through that level puts the possibility of the stock potentially reaching $800, adding that investors shouldn't pay too much attention to the company's earnings. 

"Tesla is more of a momentum stock than an actual stock based on its real valuation. So you can forget about all the fundamentals and really, in this case I think, watch those technicals for that set-up," she said.

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Jared Blikre is an anchor and reporter focused on the markets on Yahoo Finance Live. Follow him @SPYJared