Tesla's year of ups and downs has left investors wary of its stock, but one trader believes that the electric automaker is set for a big jump-start to the upside.
Todd Gordon of TradingAnalysis.com notes that Tesla (NASDAQ: TSLA) has stalled, staying "pretty much range bound over the last three trading years," he said Monday on CNBC's "Trading Nation." But the charts point to better times ahead for Tesla, and Gordon points out two trends in particular that signal that it could be time to buy the stock soon.
On a daily chart of Tesla, Gordon first looks at the lows the company has hit this year. Drawing a line from Tesla's February lows through the drop in June, Gordon sees an uptrend going through $210 that could continue in the coming months.
On the same chart, Gordon also takes a look at Tesla's highs this year, extending a line that crossed through the previous uptrend line at $210. Gordon determines that this is Tesla's line of support, and points out that the stock has already broken through, meaning that the time for investors to buy Tesla could be soon.
"We have technical support from two different trend lines right at about the $210 region," he said, referring to a level just about $5 below where Tesla was trading at midday on Monday. "So if you like the fundamental story with Tesla, this technical setup offers a pretty good opportunity to be in on the long side."
By how much could Tesla rise? Based on the technicals he sees and Tesla's consolidated trading range over the last three years, Gordon believes Tesla could climb almost 50 percent from current levels.
"You could potentially risk $10 to $12 on this trade to make possibly a break out towards the range," he said. "As we scale back, that ultimate range breakout should be able to take you up towards that $300 mark."
Tesla is currently down about 10 percent year to date, plagued by unmet delivery deadlines, concerns about the safety of its self-driving cars and doubt surrounding its $2.8 billion bid for solar energy company SolarCity (NASDAQ: SCTY).
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