Technical Analysis | Two Support Levels for Tesla: $240 and $218

Tesla's stock price is approaching some key support levels, and investors are advised to be prepared for trading volatility.

The chart of Tesla's stock price resembles a mountain range with many steep slopes. In its recent climb, Tesla's stock price approached $280, but now it appears to be pulling back from the other side of the peak.

Two support levels for Tesla

Frank Cappelleri, founder of CappThesis and market analyst, said, "The concern now is that the stock price may fall below the steep upward trendline." "Similar downward breaks of the trendline in 2023 resulted in rapid downward trends."

Tesla's stock price rose from around $220 to $280 in the short term. However, now Tesla's stock price has fallen below $260. According to Cappelleri's chart, there may be support around $240.

The recent weakness seems unrelated to the company's fundamentals. John Roque, Senior Managing Director and Head of Technical Strategy at 22V Research, said, "The entire U.S. stock market is in a corrective phase." "Tesla is unlikely to be spared."

For investors, the key question is how far the stock price can fall. After the $240 level pointed out by Cappelleri, Will Tamplin, an analyst at Fairlead Strategies, said, "A key support level for Tesla is around $218," which is the level at which the stock started to rebound in mid-August and is another price worth paying attention to for investors.

Technical analysis is highly applicable to Tesla stock

None of these three comments involve predictions about Tesla's business prospects. Like other technical analysts, they derive insights about short-term and medium-term trends for investors and traders by studying past trading patterns in stock charts.

This approach is highly applicable to Tesla's stock. Due to the impact of too much good or bad news on prices, Tesla's stock price often experiences rapid rises and falls, with several instances of oversold or overbought conditions each year.

Tesla's stock frequently encounters such situations because the company's investors and analysts tend to be somewhat extreme.

Cathie Wood of ARK Invest expects Tesla's stock price to reach $2,000 per share in the coming years. Gordon Johnson, an analyst at GLJ Research, believes Tesla's stock price is around $24 per share.