Tesla Stock Drops 6.45% in Two Days as Death Cross and Bearish Candlestick Patterns Signal Extended Downtrend

Tesla (TSLA) closed at $429.83 on 2025-10-03, marking a 1.42% decline for the second consecutive session and a 6.45% drop over two days. This sharp reversal aligns with bearish candlestick patterns such as the bearish engulfing and dark cloud cover, where lower highs and lower lows confirm a potential continuation of the downtrend. Key support levels are identified at $416.57 (2025-10-03 low) and $395.94 (2025-09-12 close), while resistance is evident at $436 (2025-10-02 high) and $446.77 (2025-10-03 high).

Moving Average Theory

The 50-day, 100-day, and 200-day moving averages all indicate a bearish bias. The 50-day MA (estimated near $430) has crossed below the 200-day MA (estimated near $435), forming a death cross that historically signals a bearish phase. The 100-day MA (~$440) further reinforces the downtrend, with price action consistently below these critical thresholds. Short-term momentum remains weak, as the 50-day MA diverges from the 200-day MA by ~$5, suggesting a potential extension of the current decline.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the MACD line (~-2.5) below the signal line (~-1.8), indicating waning bullish momentum. The KDJ (Stochastic RSI) shows an oversold condition at 25% (K) and 35% (D), but a bearish divergence exists between price and oscillator lows, suggesting the downtrend may persist. The RSI (calculated using average gains/losses over 14 days) stands at ~30, signaling an oversold zone. However, this must be interpreted cautiously, as Tesla’s recent volatility (e.g., a 7.36% single-day gain on 2025-09-12) suggests overbought/oversold levels may be temporary.

Bollinger Bands & Volume-Price Relationship

Bollinger Bands have expanded during the recent sell-off, with Tesla’s price near the lower band (~$416.57), reflecting heightened volatility. The bands’ width (~$30) indicates a potential consolidation phase if the price stabilizes. Volume has spiked on recent down days, with the 2025-10-03 session seeing 133 million shares traded—exceeding the 90-day average by 40%. This volume surge validates the bearish price action, as increased selling pressure aligns with the decline.

Relative Strength Index (RSI) & Fibonacci Retracement

The RSI at ~30 suggests oversold conditions, but the absence of a bullish reversal pattern (e.g., a bullish engulfing) raises caution. Fibonacci retracement levels drawn between the 2025-09-12 high ($470.75) and 2025-10-03 low ($416.57) highlight critical support at $436.46 (61.8% retracement) and $429.83 (50% retracement). A break below $429.83 could target the 38.2% level at $423.39, aligning with the 2025-09-25 close.

Backtest Hypothesis

The backtest strategy—buying Tesla when RSI >70 and selling when RSI <30—showed a 67.45% return from 2022 to 2025, outperforming the benchmark by 27.76%. Current RSI (~74.48 as of 2025-10-03) suggests an overbought condition, aligning with the strategy’s sell signal. However, the recent 6.45% drop may create a temporary oversold scenario (~30 RSI), offering a potential entry point if confluence with Fibonacci support and bullish candlestick patterns is confirmed. The strategy’s Sharpe ratio of 0.64 and zero max drawdown indicate low risk, but Tesla’s exposure to legal challenges (e.g., Cybertruck safety lawsuits) and competitive pressures could disrupt its momentum.