Trade Setups in Microsoft and Tesla

We’re in a harder spot than trend-trading.

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There are potentially more rewarding areas to buy MSFT and TSLA. However, these trends have been incredibly strong and those who remain bullish on this group will likely be stepping at the first real area of potential support.

We’re undergoing a choppier, larger correction, which tends to be harder to trade than when the trend is defined and strong. We’re not in a bad environment, just one where I’d say discipline and position sizing is very key.

If need be, feel free to freshen up on position sizing (and use the position calculator we built).

MSFT

For MSFT, the 10-week moving average and the ~$322 area is hard to ignore.

$322 was prior resistance turned support, while the 10-week ema is an added layer of potential support. However, keep in mind that the gap-fill down to $316.50 is possible (which lines up with the 50-day).

I’m not saying that to cover both sides of the trade, but am simply pointing out the strong trend and potential support, and the reality that lower prices could be in store.

If we test ~$322, then ~$330 is the first upside target. One consideration for a stop would be in the $314 to $315 area, leaving room down to the 50-day/gap-fill in case it comes to fruition.

Size accordingly.

TSLA

Tesla is a similar situation, with the rising 21-day moving average and the gap-fill sitting at $235.

If this level fails, then we could be looking at a retest of the Q1 high near $217.50, along with a test of the 10-week moving average.

For those trading the $235 buy zone, a push back toward the $247.50 to $250 area would be the first target. On the downside, TSLA really needs to hold the $223-225 area, although a stop could certainly be placed above that area for tighter risk control.

When things “get slick” like TSLA right now, you have to be on watch for a stop run. How it closes will be key.

Again — size accordingly.

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!