After the recent price breakout, Tesla (NASDAQ: TSLA) stock could be facing a potential pullback based on the equity’s technical setup.
Tesla closed the week at $320.72, up 3.07%. The stock has seen significant investor interest amid the post-election rally that pushed it toward the $400 resistance.
Analysis indicates that TSLA has formed a bearish counter-attack pattern on the weekly chart, a reversal signal that often emerges near resistance zones, according to GDXTrader in an X post on November 16.
Picks for you
“TSLA ended the week with a bearish counter-attack pattern, a reversal signal that occurs when price gaps up at resistance but fails to hold its gains, with bears stepping in to push the price back down to close at the previous week’s high.”
– GDXTrader
This pattern forms when Tesla opens above the prior week’s close, briefly rallies, but closes near the previous week’s high due to selling pressure.
Bears are struggling to break the $340 resistance and are gaining conviction, signaling bullish sentiment faltering. While the broader uptrend remains intact, a pullback or consolidation may be imminent.
TSLA key targets to watch out for
Looking at the next key targets, the expert suggests that bulls need to push and reclaim the $340 level and sustain valuations above this mark in the coming trading sessions. However, if bears take charge, TSLA could drop to $300 or lower.
An analysis by Real Broker also noted that Tesla is at a crucial juncture, as technical indicators suggest a pivotal breakout or breakdown scenario. Currently trading within a descending channel, TSLA must surpass the $328 level to break out of this downward trend.
A successful breakout at this level would signal potential bullish momentum and test resistance levels around $335 and $342.
On the downside, $307 is a key support zone, cushioning the stock’s recent pullback. Breaching this level could expose TSLA to further declines, with additional support at $290 and $275.
Tesla stock key fundamentals
In the meantime, although Tesla’s technical setup points to potential challenges ahead, the stock’s fundamentals remain bullish.
TSLA found momentum following Donald Trump’s election, as market players anticipate that the electric vehicle manufacturer will benefit from the new administration. This optimism is based on Elon Musk maintaining close ties with Trump during his campaign.
Reflecting on these post-election expectations, Jefferies analyst Philippe Houchois raised the stock target from $195 to $300 with a ‘Hold’ rating.
“PT raised to $300 on higher earnings and growth, and lower discount rate. In recent days, Tesla shares have looked like a proxy for Elon Musk’s wider interests on expectations of de-regulation driving growth across separate businesses,” Houchois said.
Houchois argued that possible deregulation under Trump could unlock opportunities in autonomous vehicles, robotics, and other tech ventures, aligning with Musk’s broader ambitions.
Wedbush analyst Dan Ives also sees Tesla thriving under a Trump administration, which he believes will be a ‘game changer’ for the EV maker. To this end, he has set a price target of $400.
Featured image via Shutterstock
