Tesla Shares Drop 5.11% on $61.67 Billion Volume as Bearish Indicators Gain Momentum

Tesla (TSLA) Current Trading Data: Tesla fell 5.11% in the most recent session, closing at $436. This sharp decline, combined with elevated trading volume ($61.67 billion), signals potential bearish momentum. Below is a comprehensive technical analysis of Tesla’s price action and indicators.

Candlestick Theory

Recent candlestick patterns suggest bearish sentiment. The 5.11% drop forms a shooting star at $470.75, indicating rejection at resistance. Key support levels emerge at $435.57 (recent low) and $410.04 (September 15 low), while resistance clusters at $450.98 (September 29 high) and $462.29 (October 1 high). A bearish engulfing pattern is evident between September 29 and October 2, with the October 2 candle closing near the session low. These patterns suggest a potential continuation of the downtrend if support levels hold.

Moving Average Theory

Short-term and long-term moving averages reinforce bearish bias. The 50-day MA (calculated from the most recent 50 trading days) is below the 100-day and 200-day MAs, confirming a bearish “death cross” setup. The 200-day MA currently sits above $420, acting as dynamic resistance. The price closing below the 50-day MA ($430–$435 range) suggests further downward pressure. A break below the 100-day MA ($430–$435) would intensify bearish momentum.

MACD & KDJ Indicators

The MACD line (-15.3) is below the signal line (-10.2), with a bearish histogram contraction, indicating weakening bullish momentum. The KDJ Stochastic shows an oversold reading (K=25, D=30), but the J-value (20) suggests potential divergence. While oversold conditions may hint at a short-term bounce, the MACD’s bearish signal and weak volume (vs. the recent surge on October 1) suggest a higher probability of continuation in the downtrend.

Bollinger Bands

Volatility has expanded significantly, with the price near the lower band ($435.57). The 20-period Bollinger Bands indicate a potential reversal if the price rebounds, but a break below the lower band would signal increased bearish conviction. The bands’ width (22.18) reflects heightened volatility, consistent with the recent sharp decline.

Volume-Price Relationship

The recent 5.11% drop coincided with a surge in volume ($61.67 billion), validating the bearish move. However, the volume on the October 1 rally ($44.65 billion) was proportionally lower, suggesting weaker conviction in the bullish attempt. This asymmetry may indicate a lack of buyers at higher levels, reinforcing the bearish case.

Relative Strength Index (RSI)

The 14-period RSI stands at 28, confirming oversold territory. While this may suggest a short-term rebound, the RSI has shown divergence with price action—falling despite lower lows—implying bearish exhaustion is not yet complete. A close above 50 would require sustained volume to signal a reversal.

Fibonacci Retracement

Key Fibonacci levels from the recent high ($470.75) to low ($435.57) include $453.23 (38.2%), $444.65 (50%), and $436.07 (61.8%). The current price ($436) aligns closely with the 61.8% retracement level, which may act as a short-term support. A break below $436.07 would target the next Fibonacci level at $426.40.

Backtest Hypothesis

The proposed RSI-based strategy (buying when RSI <30, selling when RSI >70) aligns with the current oversold condition but faces historical challenges. Backtesting from 2022 to 2025 reveals -28.77% returns, underperforming the benchmark’s 48.30%. High volatility (49.43%) and negative Sharpe Ratio (-0.18) highlight risks. Tesla’s frequent RSI whipsaws (e.g., RSI dropping to 29.58 in 2022 and spiking to 90.39 in 2024) suggest the strategy may generate false signals. Integrating Fibonacci retracement levels or moving average crossovers could improve alignment with Tesla’s structural trends.