Key Takeaways
- Tesla shares began the month with a strong start after leading Magnificent Seven stock declines in the first three months, when the EV manufacturer lost more than a quarter of its stock value.
- After setting a record high in mid-December, the stock entered a steep downtrend throughout most of the first quarter, following a basic Elliot Wave pattern with five distinct swings playing out.
- Investors should watch crucial support levels on Tesla's chart around $225 and $186, while also monitoring key resistance levels near $360 and $421.
Tesla (TSLA), the EV maker, led Magnificent Seven stocks down in the first quarter. The EV maker lost over a third of its market value.
The company’s shares, which have been in decline for nine weeks, were affected by falling sales as well as a reaction to Elon Musk’s growing political involvement with the Trump administration. There was also uncertainty about the impact tariffs would have on the business. Tesla shares were one of the worst performing stocks in the S&P 500 in the first quarter, losing 36%.
Tesla shares gained almost 4% to close Tuesday at $268 ahead of the release of first quarter deliveries data tomorrow. Analysts expect that the company’s deliveries in Europe and China will be slow in the third quarter.
Below, we look at Tesla’s chart in greater detail and use technical analysis as a tool to highlight key price levels that investors should be watching.
Elliot Wave Pattern Plays out
After setting their record high in mid-December, Tesla shares entered a steep downtrend throughout most of the first quarter, following a basic Elliot Wave pattern with five distinct swings playing out.
Recently, an upward trend in the stock was met with selling pressure on the 200-day moving (MA) and the relative Strength Index (RSI), which also pushed the local top of the RSI above the 50 threshold.
Chart watchers can look ahead and monitor for a possible death cross. A death cross occurs when the 200-day MA crosses below the 50 day MA. This event signals the beginning of new lower moves. If the bulls are able to successfully defend the low of last month, this may set the wheels in motion for an uptrend during the second quarter.
Let’s identify the crucial support and opposition levels on Tesla chart that are worth watching.
Important Support Levels to Watch
The first level of support to watch is around $225. The shares may attract interest in this area due to a trendline linking trading activity near last months low with a price range on the chart stretching all the way back to the gap of July.
Selling below this level opens up the possibility of a decline towards the $186 area. Investors should look for opportunities to buy and hold near the upper levels of a previous trading range that appeared on the chart between late May and early June. This area also closely aligns with a prominent swing low in August.
Monitor Key Resistance Levels
Shares could move to $360 if the shares rally above the 200 day MA. This chart location could provide overhead resistance near the countertrend high of February and two minor peaks developed in November.
Further buying in Tesla shares might accelerate a move towards $421. Investors who purchased at lower levels may decide to lock in their profits near the January high and the late-December low, both located just below the record high.
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