TSLA’s Elliott Wave Count Points Towards the Next Rally to 520+

$175-200 Downside Target Almost Reached

In our previous update on Tesla (TSLA) from mid-March, when it was trading at around $245, we used the Elliott Wave Principle (EWP) to determine if Morgan Stanley’s (MS) analyst Adam Jones’s January forecast of “$200 to $800” was realistic.

We found that “… Tesla’s shares can target around $175 to complete a complex, protracted, Primary 4th wave as an ‘irregular running flat’. These corrective patterns are typical for 4th waves. Once reached, it can rally to new ATHs, and $800 is not out of the question. Therefore, based on the EW, MS’s claim is correct, even for a “modest” $430 target.”

Fast forward: TSLA bottomed at $214 on April 7, rallied to $474 on November 3, and then dropped to $382 on November 14. See Figure 1 below.

Thus, both MS’s and our forecasts were correct: lower prices around $15-200 followed by much higher prices (at least $430). We got $214 and $474 so far.

Elliott Wave’s Road Map

While MS’s forecast of $800 doesn’t specify how it will reach that target, the EW can provide insights. Specifically, based on the internal price action, we believe TSLA is forming an ending diagonal (ED) fifth wave. In an ED, the larger waves, in this case, black W-1, 3, 5, often comprise three waves: red W-a, b, c. Moreover, the W-a tends to target the 123.6-138.2% extension of the W-1 length, measured from the W-2 low ($461-84). The W-b then drops to the 61.8-76.0% level ($365-88), while W-c typically reaches the 138.2-161.8% ($484-520).

From Figure 1, it is evident that TSLA effectively followed these Fibonacci-based target zones, reaching a high of $474 and a low of $382. Therefore, while the red W-b could become more complicated and dip slightly lower—around $370—the monthly chart indicates that the market has moved enough to consider the red W-b complete, and the red W-c should be in progress. Moreover, the Money Flow and MACD indicators made higher highs with the price (green arrows), signaling that TSLA’s price will follow suit.

Since the red W-a approached nearly the 138.2% extension ($474 vs $484), it is logical to assume the red W-c will probably reach close to the 161.8% extension at $520. Once reached, we should start looking for the black W-4, a multi-month corrective pattern back to current levels, before the black W-5 targets ideally the 200% extension at approximately $580.

Therefore, the EW has been crucial in predicting key peak and bottom prices for TSLA, providing minimal risk and maximum profits for those who look beyond just a few days or weeks. Although the market doesn’t always follow typical patterns, it has so far, so we should expect it to continue. The ideal and ultimate target of $580 is below MS’s $800 forecast, but as TSLA’s price moves forward, we will watch for any deviations that could indicate a valuation that high.