It’s just about time to buy Tesla—prepare for a 50 percent rally: Trader

Tesla's year of ups and downs has left investors wary of its stock, but one trader believes that the electric automaker is set for a big jump-start to the upside.

Todd Gordon of notes that Tesla has stalled, staying "pretty much range bound over the last three trading years," he said Monday on CNBC's "Trading Nation." But the charts point to better times ahead for Tesla, and Gordon points out two trends in particular that signal that it could be time to buy the stock soon.

On a daily chart of Tesla, Gordon first looks at the lows the company has hit this year. Drawing a line from Tesla's February lows through the drop in June, Gordon sees an uptrend going through $210 that could continue in the coming months.

On the same chart, Gordon also takes a look at Tesla's highs this year, extending a line that crossed through the previous uptrend line at $210. Gordon determines that this is Tesla's line of support, and points out that the stock has already broken through, meaning that the time for investors to buy Tesla could be soon.

"We have technical support from two different trend lines right at about the $210 region," he said, referring to a level just about $5 below where Tesla was trading at midday on Monday. "So if you like the fundamental story with Tesla, this technical setup offers a pretty good opportunity to be in on the long side."

By how much could Tesla rise? Based on the technicals he sees and Tesla's consolidated trading range over the last three years, Gordon believes Tesla could climb almost 50 percent from current levels.

"You could potentially risk $10 to $12 on this trade to make possibly a break out towards the range," he said. "As we scale back, that ultimate range breakout should be able to take you up towards that $300 mark."

Tesla is currently down about 10 percent year to date, plagued by unmet delivery deadlines, concerns about the safety of its self-driving cars and doubt surrounding its $2.8 billion bid for solar energy company SolarCity.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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