Can the Tesla stock price set a new record in 2021?

It’s been a long time coming, but the Tesla stock price has finally broken out. Does this put the EV giant on the path to a new high this year?

Tesla Inc (NASDAQ: TSLA) started this week in the same fashion it finished lt the last one. TSLA gained 3.27% to finish the day at $709.67, and crucially, closing above $700 for the first time since April.

TSLA investors have shrugged off concerns the automaker may fall under the spotlight of Chinese regulators and instead chose to focus on the country’s growing EV adoption.

NIO, Tesla’s Chinese rival, yesterday said it delivered 7,981 vehicles in July, increasing 125% YoY. Similarly, smaller competitors Li Auto and XPeng reported impressive sales data, confirming the region’s appetite for electric vehicles.

Considering the US car firms large footprint in China, this should be welcome news for the Tesla stock price.

So after gaining 16% in five days, does the stock continue higher or should investors wait for a pullback?

TSLA technical analysis

Looking at the daily price chart, we see TSLA has been trading in a narrowing pennant formation. The top end of the triangle is represented by a descending trend line from January’s $900.40 high.

Friday’s strong close to the week lifted the price well clear of the trend resistance at $674, and yesterday’s extension has confirmed the breakout.

This is clearly a positive development, reinforced by the clearance of July’s $700 high.

Furthermore, the Tesla stock price is higher than the 50,100 and 200-day moving averages at $640, $655.05 and $649.02. respectively.

However, the Relative Strength Index reading of 66.37 is approaching an ‘overbought’ reading, suggesting the rally may not sustain this momentum. Although TSLA rarely respects the RSi and often ventures deep into overbought territory.

An obvious upside target is the April high at $780.79. And following that, the bulls will be pushing for the January record.

Whilst I maintain my long-held bullish view, the markets are vulnerable to a shakeout, and on that basis, the immediate positive outlook becomes invalid if the price slips below the trend line, now at $671.00.

Tesla stock price chart (Daily)

Tesla stock price

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