The S&P 500 has reached an all-time high, but Tesla Inc. (NASDAQ:TSLA) has not followed the trend of gains. TSLA has been a major outlier and at a crossroads as it approaches a “confluence of support,” with its price down about 55% off its all-time high in late 2021. Tesla has encountered a stepwise downtrend of lower lows and lower highs, reflected in its 38.2% retracement at around $223. Despite the downtrend, the stock is currently oversold, with an RSI below 30 for the last couple of weeks. The price has now reached the lower boundary of its trend channel, indicating potential support around $170, not far from the Fibonacci level of $177.
Despite these conditions, the real question is whether we will see a bounce and the beginning of a broader advance for Tesla, potentially leading back to the July 2023 high around $300. However, the stock faces resistance around the $225-230 range. If we do see a countertrend bounce, it will be important to assess whether it is the beginning of a more sustained recovery, particularly in light of the confluence of resistance around the $225-230 range, or just a short-term mean reversion bounce. It’s clear that multiple techniques such as RSI, Fibonacci retracement, and visual trend gauges are lining up, suggesting that Tesla may be primed for a decent countertrend bounce.
This technical analysis is about the weight of the evidence, considering market history and recognizing the importance of when multiple techniques line up. For Tesla, the charts suggest that it may experience a decent countertrend bounce, but investors will need to watch closely for confirmation of a broader advance and a sustained recovery.