Key Takeaways
- Tesla shares will be in focus to start the week after logging two consecutive days of losses, as investors look ahead to the EV maker’s fourth-quarter deliveries report.
- The stock has consolidated within a pennant, a chart pattern that signals a continuation of the current uptrend.
- A measured move, which calculates the distance in points of the impulsive move higher that preceded the pennant and adds that amount to the pattern’s top trendline, forecasts a price target of $615.
- During pullbacks, investors should watch key support levels on Tesla’s chart around $360 and $300.
Tesla (TSLA) shares will be in focus to start the week after logging two consecutive days of losses, as investors reassess the stock’s extended post-election rally and look ahead to the EV maker’s fourth-quarter deliveries report.
Wall Street predicts the deliveries number, which is expected to be released on Thursday, to come in around 510,000 units, which would represent 10% growth from the prior quarter and a 5% improvement from a year earlier.
Since the Nov. 5 presidential election, Tesla shares have surged more than 70% on expectations that CEO Elon Musk’s ties with President-elect Donald Trump and growing influence in Washington will benefit the automaker’s autonomous driving ambitions.
Tesla shares lost nearly 7% over the last two trading sessions, closing Friday at $431.66. The stock is down from an all-time high of $488.54 set on Dec. 18, the same day the Federal Reserve said that it would likely slow the pace of interest rate cuts in 2025. High interest rates could weigh on vehicle sales as most buyers finance purchases.
Below, we take a closer look at the technicals on Tesla’s chart and point out important price levels to watch out for.
Pennant Pattern Takes Shape
Tesla shares trended sharply higher for several weeks after breaking out from an ascending triangle in early December, but have since consolidated within a pennant, a chart pattern that signals a continuation of the stock’s uptrend.
While the relative strength index (RSI) has continued to fall since topping out near the stock’s all-time high (ATH) in mid-December, it remains above 50, pointing to healthy price momentum.
Let’s apply technical analysis to forecast a price target in Tesla shares and also identify several major support levels that may come into play during pullbacks.
Measured Move Price Target
To forecast a potential upside price target if a continuation move plays out, investors can use the measured move technique, also known as the measuring principle.
When applying the tool to Tesla’s chart, we calculate the distance in points of the impulsive move higher that preceded the pennant and add that amount to the pattern’s top trendline. In this case, we add $150 to $465, which projects a target of $615, an area where investors may decide to lock in profits.
Major Support Levels to Watch
A breakdown below the pennant’s lower trendline could initially see Tesla shares revisit the $360 level, a location currently just above the upward sloping 50-day moving average where they may find support near the ascending triangle’s top trend line.
A close below this area opens the door for a retest of the $300 level. Investors may seek buying opportunities in this region near the psychological round number and the stock’s prominent July 2023 swing high.
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As of the date this article was written, the author does not own any of the above securities.
