Tesla (TSLA) Shares Fall Despite Strong Deliveries Report: Key Price Levels to Watch
Despite a better-than-expected deliveries report, Tesla (TSLA) shares experienced a second consecutive day of declines on Friday. This pullback follows a surge in the third quarter, where Tesla was the top performer among the Magnificent Seven stocks. Investors should be monitoring key support and resistance levels to anticipate potential future movements.
Profit-Taking After Q3 Surge
The recent dip in Tesla's stock price appears to be driven by investors securing profits after a substantial 40% gain in the third quarter. This made it the leading stock within the Magnificent Seven during that period. On Friday, shares were down 1.6% at $429, following a more significant 5% drop on Thursday.
In recent months, Tesla has benefited from CEO Elon Musk's reaffirmed dedication to the company. This followed his time advising the Trump administration. Additionally, investor optimism surrounding Tesla's advancements in autonomous driving systems, robotics, and a heightened emphasis on AI opportunities has played a role.
Investors eagerly await further business updates from Tesla when the company announces earnings on October 22.
Bearish Engulfing Pattern Signals Potential Downturn
Having broken out from a wide ascending triangle last month, coinciding with a bullish golden cross formation, Tesla shares maintained an upward trajectory. However, Thursday's trading session saw the stock close below the preceding day's low, resulting in a bearish engulfing pattern. This candlestick formation serves as a warning sign of a possible downward movement. Furthermore, yesterday's selling activity drove the relative strength index to its lowest point since early September, indicating diminishing price momentum.
Crucial Support Levels to Watch
A downward shift could initially lead to the shares testing the $367 level. This area is likely to attract buying interest near the ascending triangle's top trendline, which also forms part of a longer-term horizontal line extending back to November of the previous year.
Failure by Tesla bulls to defend this level could pave the way for a potential decline toward $292. Investors may seek entry points within this region, near a trendline connecting various peaks and troughs on the chart between March and July.
Resistance Levels to Monitor
The first resistance level to monitor is around $489. Tactical traders who acquired shares at lower prices might consider this location near the December peak as a potential exit point. This level also represents the stock's all-time high.
If Tesla shares enter price discovery mode, investors can estimate a potential resistance level using the measured move technique, also known as the measuring principle. When applied to Tesla's chart, an 80% increase applied to the $367 level, projects an upside target of $660.60.
