Tesla's stock rebound to be followed by another drop

Last week, Tesla shares hit the lowest level since October, dropping below $218. From the December top they fell by 55%, and this, along with the accumulated oversold condition, contributed to the rebound. However, the bulls' activity faded close to the 250 level, and the price returned to the downward movement. If Tesla shares don't get support from the news background, there may be a pullback to the level of 218.

According to analysts, yesterday's drop in the American company's stock by almost 5% is related to the introduction of a new charging system for electric cars by China's BYD. This technology allows charging the battery for an 80-kilometer trip in just 1 minute. In comparison, Tesla can only get a charge for an 18-kilometer trip for the same amount of time. The new product may allow BYD to increase its market share at the expense of both traditional automakers and electric vehicle suppliers, including Tesla.

Bloomberg experts express concerns about Tesla's further losses in the Chinese market. In February, local sales fell by nearly 50% to 30,700, the worst result since July 2022. The American company still has an advantage over its competitors due to its wide network of charging stations, but as new technologies develop, this may no longer be enough to attract customers.

Ross Gerber, a long-time owner of Tesla shares, does not expect them to recover this year. In an interview with Business Insider, he criticised Ilon Musk for his focus on the development of artificial intelligence and operations at the US Department of Government Efficiency. According to Gerber, such prioritisation leaves Musk no time to manage Tesla. Now the company is suffering great losses due to its CEO's ambitions.

Due to the recent rebound of Tesla stock, the Stochastic indicator has left the oversold zone and no longer stands in the way of a new wave of decline with a target of 218.

Consider the following trading strategy:

Sell TSLA in the range of 235–245. Take profit — 218. Stop loss — 270.