What The Tesla Stock Chart Is Telling Us After A 37% Gain Over The Past Week

Tesla (TSLA) remains in the spotlight Tuesday after the electric vehicle maker’s shares have gained 37% over the past five trading days as investors look past recent challenges and focus on news that the company plans to accelerate production of new models and has reportedly won tentative approval to deploy Tesla’s Full Self-Driving system in China.

Although the automaker, which was the worst-performing S&P 500 stock in the first quarter, posted quarterly results last week that fell short of Wall Street’s expectations, its stock jumped 12% on Wednesday following the report as the company said it plans to accelerate production of new models, including a lower-cost vehicle to compete with cheaper Chinese rivals.

Shares surged 15% on Monday after reports that founder and CEO Elon Musk, on a secret weekend trip to Beijing, had reportedly won tentative approval to deploy Tesla’s Full Self-Driving (FSD) system in China and that the company had expanded its partnership with Chinese tech conglomerate Baidu (BIDU) to assist in developing its navigation and mapping software.

“This is a key moment for Musk as well as Beijing at a time that Tesla has faced massive domestic EV competition in China along with softer demand.” Baird analyst Ben Kallo wrote in a Monday note to clients cited by Barron’s. Kallo also pointed out that Tesla’s FSD approval sets a blueprint about how to navigate complicated autonomous driving regulations when expanding globally. “We also view this announcement as a potential pathway for Tesla to follow for entering new markets,” he said.

Level to Watch as Stock Rebounds

Tesla shares have traded within a descending channel since June 2023, testing the pattern’s lower trendline on four different occasions over that period. The most recent test earlier this month saw the price temporarily break down below the pattern but promptly move back within the channel to form a bear trap on the chart. 

Consequently, traders caught in short positions have rushed to cover their positions, leading to a short squeeze that has helped drive the stock back above the 50-day moving average. Looking ahead, investors should closely monitor the $222 level, an area where the price may run into resistance from both the channel’s upper trendline and the 200-day moving average.

Tesla shares finished Monday’s session at $194.05, the highest closing level since March 1 though still down 22% since the start of the year. The stock was down 2.0% at $190.20 in premarket trading Tuesday at around 7:00 a.m. ET.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.