Overview of Recent Declines

Tesla Inc. (TSLA) witnessed a sharp decline in its stock price, falling over 15% in trading on Monday. This drop marked a significant moment, as the share price fell below levels recorded on Election Day for the first time. This decline places Tesla shares at $220.15, a stark contrast to their performance following Donald Trump’s election victory, when the stock had seen substantial gains driven by optimism regarding CEO Elon Musk’s relationship with the then-newly elected president.

Factors Behind the Drop

Since reaching an all-time high on December 18, the value of Tesla shares has plummeted by 55%. Investors are increasingly anxious about several factors impacting the company. These include:

• Concerns regarding Musk’s involvement with the Trump administration, particularly in the role of leading the Department of Government Efficiency.
• Weak sales figures emerging from crucial markets such as China and Europe.
• Uncertainty regarding the effects of tariffs on the automotive industry.

In an interview, Musk even noted the challenges he faces running his businesses, stating he’s doing so “with great difficulty,” which further exacerbated investor concern.

Technical Analysis of Tesla’s Stock

The recent drop has resulted in Tesla’s stock falling below the critical 200-week moving average, a key indicator closely watched by traders. This movement indicates a bearish trend, compounded by significantly increasing trading volumes, suggesting that institutional investors may be actively selling shares.

The Relative Strength Index (RSI) currently reflects bearish momentum with a reading under 50, although it is approaching levels that historically have coincided with price rebounds, particularly since May 2022.

Key Support and Resistance Levels

Support Levels

Investors should keep an eye on important support levels around:

• $215: This price point may act as a significant support level, as it is reinforced by historical lows identified from May to July 2022 and aligns with the formation of an inverse head and shoulders pattern developed in the last year.
• $165: Should shares decline further, this level represents a potential buying opportunity, correlating with an earlier low from April 2023 and aligning with critical levels seen in the inverse head and shoulders pattern.

Resistance Levels

On the recovery front, the following resistance levels are crucial:

• $265: This level may represent overhead resistance and is significant as it aligns with the neckline of the inverse head and shoulders pattern.
• $300: A decisive close above this threshold could reintroduce the stock to this psychologically significant level, where prior buying activity may encourage profit-taking among investors.