Buying Tesla stock as it corrects down to support

Optimism around the upcoming meeting of two major economies’ leaders has provided a moderate rise in Tesla’s shares. On October 27, the price hit $455, the highest level since the beginning of this month. Investor confidence was not only supported by the aforementioned event but also by increasing expectations of a potential trade deal between the United States and China, which may finally dot the i's and cross the t's on the issue of rare earth metals. Nevertheless, Tesla’s key challenges are still in place.

The firm’s fundamental predicament remains tough. Even with record electric vehicle deliveries, net income in the third quarter (Q3) dropped 37% due to import duties and lower regulatory credit income. In addition, Tesla’s model lineup is gradually becoming outdated, and it had to deal with two recall campaigns in October.

The technical setup shows an unclear trend. The Stochastic Oscillator (5, 3, 3) is neutral with %K at 53 and %D at 59 and has not given any clear signals since retreating from the oversold zone, which the indicator reached on October 22. The Chaikin Oscillator (3, 10) is declining, despite still being in positive territory. This points to weaker bullish momentum after its peak on October 23. Concurrently, the price is rising, which may indicate a bearish divergence and an imminent downward correction.

The expected interest rate cut by the Federal Reserve (Fed) on October 28–29 may temporarily support the tech market, but Tesla's fundamental challenges still need to be addressed. The high volatility of the stock suggests uncertainty among investors about the company's business prospects.

Share prices are likely to continue rising in the near term, but may face profit-taking. In this case, buying on a pullback could be an option. Investors will then focus on the approval of a new compensation package for Elon Musk, which is to be decided by shareholders on November 6. 

Consider the following trading strategy:

Avoid buying at current levels. Consider entering a buy position during a correction to the $440–$430 range. Set Take profit at $470 and Stop loss at $425.5.

This forecast is valid from October 28 to November 4, 2025.