Tesla's stock plummeted 55% since December amidst Musk's government role and sales concerns. Can key support levels trigger a rebound, or is further decline inevitable? We dissect the charts and expert analysis to reveal potential turning points.

Is Tesla's Dream Run Over? Stock Plunges to Pre-Election Levels!

Tesla (TSLA) shares experienced a dramatic 15% nosedive on Monday, dragging it below its Election Day valuation for the first time since Donald Trump's victory. This fall positions Tesla as the S&P 500's biggest loser for the day. What's fueling this dramatic reversal of fortune?

From Election Euphoria to Investor Anxiety: A Timeline of Tesla's Tumultuous Journey

The electric vehicle (EV) manufacturer initially soared following Trump's November 5th presidential win, fueled by the expectation that CEO Elon Musk's rapport with the president would directly benefit the company.

However, the optimism proved short-lived.

Since hitting an all-time high on December 18th, Tesla's stock has crashed by 55%. The primary driver? Growing investor unease surrounding Musk's position as the leader of the Department of Government Efficiency. Investors fear this could damage the Tesla brand and hamper sales. Adding fuel to the fire are recent disappointing sales figures from China and Europe, coupled with anxieties about the potential impact of tariffs on automakers.

The stock's woes continued into extended trading Monday, dropping an additional 3% after Musk confessed to Fox Business that he's running his businesses “with great difficulty,” despite expecting to remain in the Trump administration for another year.

Technical Analysis Unveiled: Can Tesla Find Solid Ground?

Let's dive into the technical analysis of Tesla’s weekly chart to pinpoint crucial price levels that could signal potential shifts in momentum amidst this heightened volatility.

The 200-Week Moving Average: A Broken Barricade?

Since a "shooting star" formation marked the stock’s record high in mid-December, Tesla shares have been on a relentless downward trajectory. Monday’s trading saw the price plunge below the closely watched 200-week moving average – a significant bearish signal.

Moreover, the recent drop has been accompanied by increasing trading volumes, suggesting that larger market participants, including institutional investors and hedge funds, are actively selling off their positions.

While the relative strength index (RSI) confirms the bearish momentum with a reading below 50, it has also dipped into a territory that has historically triggered bounces in the stock, dating back to May 2022. Is this a sign of potential recovery, or a false dawn?

Decoding Tesla's Chart: Key Support and Resistance Levels to Watch

Tesla shares closed Monday's regular trading session at $220.15, a staggering 15.4% drop. What levels are critical to watch moving forward?

Support Levels: Where Could Tesla Find a Foothold?

1. $215: This immediate level, close to Tuesday's projected opening price, could receive support from a series of lows observed between May and July 2022. Additionally, it aligns with the "shoulders" of an inverse head and shoulders pattern that developed over a year between October 2023 and 2024.
2. $165: Further downside could lead to a fall to the $165 level. This region, near the April 2023 pullback low, might attract investors seeking buying opportunities. It also coincides with prices just above the bottom of the inverse head and shoulders pattern.

Resistance Levels: How High Can Tesla Bounce?

During any potential recovery, keep a close eye on these resistance levels:

1. $265: This level represents the inverse head and shoulders neckline. It may act as a significant overhead resistance point.
2. $300: A convincing break above $265 could pave the way for Tesla shares to retest the psychological $300 level. Investors who bought the recent dip may look to secure profits near the prominent peaks observed between January 2021 and July 2023.

The Road Ahead: Uncertainty and Potential

Tesla's current predicament is a complex interplay of factors, from Musk's dual role in government and business to broader economic concerns. While technical analysis provides potential guideposts, the future remains uncertain. Will Tesla find support at key levels and stage a comeback, or is this just the beginning of a deeper correction? Only time will tell.