Tesla Shares Dip After Initial Surge on Upbeat Deliveries

Tesla share price surged initially on the day, opening with a bullish gap after the company reported better-than-expected vehicle deliveries of 88,400 in the first quarter of 2020. This figure beat the estimates of market analysts, who had predicted 80,000 vehicle deliveries.
Tesla share price responded in an upbeat fashion, primarily because the company was still able to surpass estimates despite having to shut down its factories as a result of the coronavirus. Indeed, the company’s Shanghai factory was reported to have achieved a record level of vehicle production, contributing to the 102, 672 vehicles produced by Tesla in the first quarter of 2020. However, the dip in market sentiment caused by two days of shocking employment data (initial jobless claims and the NFP) have taken the shine of Tesla share price performance. The stock is still up 5.45% on the day but is well off its intraday highs at 515.49.
Tesla had provided a target of delivering 500,000 vehicles in 2020 before the coronavirus outbreak. The company did not give any forward guidance regarding this target.

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Technical Outlook for Tesla

Tesla share price appears to be in the consolidation phase of the bull flag, if previous price action dating back to mid-March 2020 is considered. If the pattern’s technical resolution is considered, Tesla share price would have to break the flag’s upper border. This would make a case for Tesla share price to target the initial target at the 61.8% Fibonacci retracement from the swing low of 6 December 2019 to the swing high of 19 February 2020. This price level (558.15) also marks previous lows seen on 22 Jan and 28 Jan 2020. Above this region, price could target the previous high of 13 March at 599.38 area. This target would mark the completion point of a measured move from the flag’s breakout point.

On the flip side, weakening sentiment on the Nasdaq could invalidate the flag setup, breaching the lower border of the consolidation area to target 457.01 initially (78.6% Fibonacci retracement), before the door opens towards 403.60 (31 December 2019 low). 363.10 constitutes a future support which only becomes relevant if sellers successfully break down 403.60.

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