08/24/2021 |
$TSLA Monthly Chart Case Study: Raindrop Charts®, Anchored VWAP, Volume by Price, and Seasonality
Some price action traders believe that price is the only thing that matters. Their charts are “clean” with nothing more than support and resistance levels marking key zones. Using this minimalist approach, these traders plot their entries and exits with varying levels of success and profitability. However, some other price action traders know that the “tsunami” starts far away and by the time it hits the shores (S/R Levels), many are left unprepared. Meaning, this camp of price action traders also believe that “price action” is very important, but also find an edge by using a few useful indicators for early signals that may give some clues into price direction and trend. Let’s look at a few of these indicators which might be of use to the price action trader on the monthly chart for Tesla ($TSLA).
$TSLA Monthly Chart
This is a monthly Raindrop chart of Tesla that focuses on getting the full picture for Tesla on both the technical and seasonality side of things into the rest of 2021. This chart focuses on using volume tools as well as historical seasonal statistics since the IPO to get an idea of how Tesla stock may move in the coming months. This chart was created using the TrendSpider platform.
- This number represents where the anchored volume by price (VBP) and volume-weighted average price (VWAP) start at, which is the “anchor” point. In this case, we are measuring both the volume distribution (VBP) and average price (VWAP) since the covid lows as this was a “reset” in the market when all participants capitulated from the Covid Panic. This volume-weighted average price below (blue line) shows what the average price per share is since the Covid low which essentially shows the dollar cost average price of all shares transacted since that point in time. As you can see, with the price at $680 and the average price per share since March 2020 at around $400, the average participant has quite a bit of profit.
- This number shows the quarter-to-date anchored accumulation/distribution indicator on TrendSpider going red after over a year of being green during the uptrend that started in Fall of 2019. This indicator going red shows selling pressure starting for Tesla after topping out earlier in 2021.
- This number shows the recent monthly breakout through the resistance trendline since the 2021 highs. As you can see, there is quite a bit of volume at the top of the month of August’s range shown by the Raindrop Chart® and the volume profile (bulge) at the top of the range. However, it is also important to note that into the end of August, this Raindrop® is red which confirms the red monthly candle as well. Anytime you have a red Raindrop® and red candle, it shows confirmation of a move. On top of this, you can also see a volume shelf forming here which is the gray area pointing out to the right which shows a decent amount of volume building at this current price level and has been a base for price to move up off.
- This number shows the historical seasonality for Tesla since the IPO in 2010. As you can see, going into September and October, TSLA only has a 36% win rate which is one of the lowest-performing months of the year historically. Include this with the red candle and red Raindrop®, it may be worth having a cautious approach into the coming months.
We hope that this case study helps to show how striking a good balance between “clean” charting and a few useful indicators can help you to improve your overall trading performance by providing more insight into price direction and trend than price alone can offer. Why not try out some of these indicators along with the many others available on TrendSpider for 7-days free with this special offer.
