Tesla’s shares staged a major advance over the first half of this year but since peaking in June, appear to have come under distribution with a major top forming. Over the last three months, the uptrend was broken, a head and shoulders top has been forming, while a growing negative RSI divergence has signalled upward momentum slowing.

Key points in the head and shoulders pattern have coincided with additional bearish technical signals. A double top coincided with the head of the pattern. The formation of the right shoulder in particular coincided with a number of other bearish indications including a failure to retake the extension of a broken uptrend line, a failure to retake the 50-day average (both showing support becoming resistance) and a failure of the RSI to regain 50, confirming a downturn in momentum.

Current resistance appears at the 50-day average near $340 with the shares trading near $325. Initial downside support may appear near $310, the rising neckline of the peaking patter, then the $300 round number and $285 a previous breakout point.

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