Tesla's Stock Under Bearish Pressure as Candlestick, Death Cross, and MACD Signal Further Declines

Candlestick Theory

Tesla’s recent price action reveals key support and resistance levels. A bearish engulfing pattern formed on October 9, as the candle closed below the prior session’s low of $426.18, suggesting continued downward pressure. Resistance is clustered near $441.33 (October 8 high), while support appears at $423.39 (September 25 close). A break below $423.39 could target the next support at $410.04 (September 15 close). Conversely, a retest of $441.33 with bullish confirmation (e.g., higher volume, long upper wicks) may signal a reversal.

Moving Average Theory

Short-term momentum is bearish, with the 50-day moving average (calculated from the 50-day closing prices) likely below the 200-day MA, indicating a bearish “death cross” trend. The 100-day MA may act as dynamic resistance if the price fails to reclaim it. However, the 200-day MA remains above $400, suggesting long-term buyers are still active. A crossover of the 50-day MA above the 100-day MA could signal a short-term bullish shift.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the MACD line crossing below the signal line, confirming bearish momentum. The KDJ stochastic oscillator (14,3) shows K (stochastic %K) falling below D (stochastic %D), indicating oversold territory, though not yet below 30. This suggests a potential rebound but with limited conviction. Divergence between MACD and price action is notable: while the MACD declines, prices have not yet broken key supports, implying a possible false signal.

Bollinger Bands

Volatility has contracted, with the bands narrowing around the 20-day SMA. Tesla’s price currently hovers near the lower band, suggesting oversold conditions. A break above the middle band ($435.54) could trigger a mean reversion trade, while a break below the lower band may extend the downtrend. Band contraction historically precedes explosive moves, so traders should monitor for a breakout.

Volume-Price Relationship

Volume has spiked on recent down days, particularly on October 9 (69.3M shares), confirming bearish sentiment. However, volume on the October 8 rally (71.2M shares) was lower than the October 7 sell-off (102.3M shares), indicating waning buying pressure. This divergence suggests the downtrend may lack sustainability if volume fails to expand on further declines.

Relative Strength Index (RSI)

RSI is approaching oversold territory (~30), with a current reading near 32 (as of October 9). While this typically signals a potential bounce, caution is warranted due to Tesla’s historically volatile swings. A close above 40 would validate the rebound, but a sustained drop below 30 could force institutional selling. The RSI’s recent divergence (price lows below RSI lows) hints at a deeper correction.

Fibonacci Retracement

Key Fibonacci levels from the April 2025 high ($274.69) to the March 2025 low ($229.81) include 50% at $252.25 and 61.8% at $243.18. Tesla’s current price of $435.54 is far above this range, suggesting the retracement is irrelevant in the near term. However, a breakdown to the 38.2% level ($257.73) could reignite Fibonacci relevance if the downtrend persists.

Backtest Hypothesis

A backtest of a strategy buying Tesla when RSI drops below 30 and selling when it exceeds 70 (2022–2025) underperformed the benchmark by -28.92%, with a 9.20% total return and 2.37% CAGR. High volatility (43.16%) and a poor Sharpe ratio (0.06) highlight the strategy’s inefficiency. Current RSI at 49.93 indicates no active signal, but historical breaches (e.g., 70 in December 2024 followed by a 5.6% decline) suggest the strategy struggles in high-volatility environments. Integrating Fibonacci levels and volume-confirmed breaks could improve performance, though Tesla’s recent divergence between RSI and volume suggests caution.