I know it’s easy to get caught up in the short-term movements of high-flying momentum stocks, but before one gets overly bearish on Tesla (TSLA) right now, let’s take a look at the bigger picture.

When Tesla’s stock price broke out to new highs we did a pretty good job of projecting a resistance point at $270 (Click here to link to post). The eventual swing high came in at $265.

The chart above shows price action in Tesla over the last 18 months or so. In 2013 Tesla’s stock price dropped about $80 points and became the biggest correction for that year. We currently find ourselves in a correction that has approximately matched the size of that 2013 correction of $80 points along with tested possible support at the prior swing high on the daily chart (white horizontal line).

It appears resistance now stands around the $220 level going forward. Tesla is scheduled to report its next quarterly earnings on May 14th. This may all come down to two factors, 1) being actual earnings and forward guidance and 2) overall market trend. But in terms of current short-term price action, this may turn out to be a good entry point.