TSLA/USD (Tesla Motors), Lithium, Technical Outlook, Edition #50 (13/07/21)

For the 50th edition of the Qluster technical report, the team looks at Tesla, an unstoppable force in the EV space, and Lithium a core element required to build the batteries that power the industry

The Qluster team would like to thank our readers for supporting us. Today is a special edition marking the 50th release of the Qluster daily technical report, focusing on one of the most innovative companies, Tesla, with a CEO that loves creating controversy on Twitter.

Tesla - The Apple of EV’s or an over-hyped retail-driven stock?

The EV giant, Tesla, has made big moves off the back of Germany, extending a €9,000 subsidy for the purchase of electric vehicles under €40,000.

Let us begin tonight’s deep dive with the D1 $TSLA chart below and determine where this latest bounce is likely to cool off.

TSLA/USD - 1 Day

Using the Fibonacci retracement tool with key moving averages (EMA and MA), we can see that $TSLA has experienced a significant pullback from an all-time high of USD 901.

After correcting roughly 40% from these highs, $TSLA has now found support around the D1 200MA (BLUE) and been consolidating around it since.

Fast-forward 6-months to the present and the correction now appears to be over.

$TSLA has managed to flip and twist the 20 EMA (GREEN) and 50 MA (RED) into support; this bullish confluence was enough to charge a picture-perfect breakout and re-test.

Spurred on by news of the EV subsidy in Germany, $TSLA doesn’t have many sellers in its way until USD 770, which is where the .618 Fibonacci retracement level shall determine if this correction is over.

However, the lawsuit against Elon Musk and Tesla could trigger a bearish reversal. The lawsuit alleges that SolarCity was near bankruptcy at the acquisition time. In addition, musk, who was the chairman of the board of directors and the largest stockholder, was alleged to have directly benefited from the transaction, as did some of his friends and family, the lawsuit alleges, as both founders are Musk’s cousins.

Furthermore, Musk’s Twitter may be a further back swan for Tesla. It is no secret that Musk’s tweets move markets, and this may make him a prime target for the SEC (Securities and Exchange Commission), as he was already a target of an investigation once and was forced to settle.

This, combined with rapid competition in the space, could give Tesla a more fair evaluation in the market versus other automakers, especially considering that even legacy automakers are starting to build complex EV segments in their respective businesses.

Lithium - The rare element fundamental to building battery technology

Extending this scope further into renewables and green commodities once more, the Global Lithium ETF ($LIT) has just hit a fresh all-time high of USD 82 p/Oz.

Share

The chemical element is leading the renewables charge and is currently chipping away at some resistance detailed below…

A pullback here would be healthy before moving higher; regardless, an additional breakup from here would be incredibly bullish

LIT/USD (Lithium) - 1 Day

As the global EV market heats up and new competitors enter the fray, Lithium may lead the charge in the commodities market as one of the best performers. Being incredibly difficult to source ethically and rare, the more auto companies manufacture EV’s, the higher the demand for the element, driving up the price.

Q’s Conclusion

Tesla is definitely an innovative company and is years ahead of the competition in terms of EV technology. This, combined with the increased demand for renewable and climate-friendly technologies, will also increase consumer demand. However, the heavy increase in EV competition combined with Elon’s erratic behaviour could create the perfect black swan for the stock.

Lithium, on the other hand, is a staple requirement of EV technology. As more competitors enter the space, demand will only be driven ever higher as the element becomes more scarce.

See you again for the next update.

- q

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