Tesla (TSLA) Shares Fail to Hold at an All-Time High

Yesterday, Tesla (TSLA) shares declined by more than 3%, with the following developments observed:
→ the session opened with a bearish gap;
→ the price fell nearly 8% from the all-time high recorded on 22 December;
→ the psychological $500 level has yet to be overcome.

The fundamental trigger for the decline was news that Tesla’s South Korean battery supplier has significantly reduced the value of its contract. The market may have interpreted this as a signal of potential weakness in future vehicle sales.

In addition, the rally in TSLA shares since the beginning of December may have encouraged long-position holders to take profit.

When analysing TSLA price action on 17 December, we:
→ identified an ascending channel that has been in place since the summer;
→ highlighted the strength of the breakout above resistance near the $465 level (accompanied by a bullish gap) and suggested that this area could act as support.

However, yesterday’s sell-off pushed the price below the aforementioned gap, thereby invalidating this support. Moreover:
→ the December upward trajectory (shown in orange) has been broken;
→ the stock has fallen below the median of the ascending channel.

In light of the above, we could assume that bearish momentum currently dominates, and TSLA shares may move towards the lower boundary of the ascending channel in the short term.

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