Holding $101 - $104, Tesla Motors Inc (NASDAQ:TSLA) Can Still Give A Bounce

Denver, CO, 07/17/2013 (Avauncer.com) – Tesla Motors Inc (NASDAQ:TSLA) (Closed: $109.05, Down: 14.31%) dropped on huge volume yesterday as Goldman Sachs Group Inc (NYSE:GS) gave a target price of $84 for the stock. It had closed at $127.23 the previous day. The target given by the analysts of Goldman Sachs is 34% lower than that price. Another 20% drop is due if that target is to be achieved. What the vertical fall of the last session effectively shows is the power of the big broking houses. So is the journey over for Tesla in the near future? The charts and the price action of the next few sessions may give us some clue.

The stock has moved in a very narrow range of only 17 points for 3 long years. The average volume hovered near 8 million for that period. The regularity of the range gave any patient investor or trader ample opportunity to buy in the lower levels and sell in the upper levels for a regular $15 - $16 gain. But when it finally broke out of the range in April 2013, there was no turning back. From the breakout point at $46.70, it went straight to $133, or about 180% appreciation in just 12 weeks!

A vertical rise gets overstretched at some point and corrects sharply. That was first seen in the period of May 29 to June 3, when it corrected 27 points or about 23% in just 4 sessions. The current fall from the top of $133 has taken 2 sessions so far to drop by 26 points. The magnitudes of the two corrections are very similar till this point. Also, major support awaits the price in the zone of $101 - $104. Until these levels break, the probability of another bounce, even a new high can’t be discarded.

$94 - $95 zone is another strong support area too, but then the price structure would be weak.