Go long on Tesla shares with $335 target as selling pressure fades after sharp drop

Tesla stock has been in freefall for quite some time, slicing through multi-month support levels in a dramatic sell-off. Amid the wreckage, however, the first glimmers of relief are starting to appear, as sellers show signs of fatigue. The backdrop remains uneasy, with investors still reeling from disappointing quarterly earnings and growing anxious about an overheating AI sector, all while awaiting the Federal Reserve's (Fed) decision. Nevertheless, several technical signals suggest that the worst may be over, at least for now.

On the daily chart, Tesla closed at $308.67, a staggering 17% below its 20-day exponential moving average at $371.25. A gap of this magnitude screams an overshoot—it is the kind of extreme that often precedes a snap-back rally, especially since the EMA itself has only just begun to roll over after a long, sluggish decline. In plain English, the price has fallen too far, too fast, and a technical rebound toward the moving average is likely.

The Stochastic Indicator has plunged deep into oversold territory. It is not a guarantee of a reversal—in a powerful downtrend, these readings can persist—but it dramatically raises the odds of a reprieve. Concurrently, the Chaikin Oscillator is in the red, with money flowing out since mid-July. Nevertheless, the pace is decelerating. This subtle yet important shift suggests that bulls may be quietly stepping in near current levels.

Fundamentally, headwinds are still at play: disappointing earnings, massive AI capital expenditures, a hawkish Federal Reserve, and global uncertainty. But here's the thing: the market is a forward-looking machine. Much of this bad news has already been baked into the price. And history shows that after such violent drops, a pause—or even a relief rally—is often just around the corner.

For those looking to act, pay attention to the trading plan down below:

Buy Tesla stock near $310. Place Take Profit at $335. Set Stop Loss at $292.

This forecast holds true from July 28 till August 4, 2026.