Tesla shares fall after Autopilot safety issues

Shares in Tesla have been hit after the National Highway Traffic Safety Administration announced a formal investigation into the company’s Autopilot system after 11 crashes which resulted in 17 injured people and one dead person.

News that ‘Big Short’ investor Michael Burry increased his short position against Tesla also weighed on risk sentiment regarding the stock. He now holds put options (a bet that the stock will fall) of 1.1 million shares which is around $730 million.

Interestingly, the stock was already trading at the top of a range-based wedge pattern where sellers had turned up before and an area where short term traders may start to initiate short positions.

Source: Admirals MetaTrader 5, TSLA, Daily – Data range: from Feb 3, 2020, to Aug 17, 2021, performed on Aug 17, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.

Last five-year performance:

• 2020: 743.44%
• 2019: 25.70%
• 2018: 6.89%
• 2017: 45.70%
• 2016: -10.97%

In the daily chart of Tesla’s share price above, the wedge pattern has been highlighted by the two black diagonal lines. The price has been trading in between these support and resistance levels.

As the price has most recently rejected the top resistance level, there is potential for the price to move back down to the lower support level to completed the wedge formation. This could represent buying opportunities for dip investors or target levels for short term sellers.

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