In the wake of a turbulent trading session, Tesla (TSLA) shares exhibited little volatility early Tuesday, slighting down by 4% on Monday amid concerns regarding new California electric vehicle (EV) tax credits and cautious remarks from analysts at UBS.

California's Governor Gavin Newsom announced that the state would provide EV tax credits contingent upon the Trump administration's decision to remove them at the federal level. In his statement, Newsom emphasized that these rebates are designed to foster innovation and competition among zero-emission vehicle (ZEV) manufacturers, potentially benefiting smaller EV companies over industry giants like Tesla.

Investor sentiment faced further challenges after UBS analyst Joseph Spak noted that the recent post-election surge in Tesla stock was primarily driven by "animal spirits," referring to investor optimism rather than any fundamental shifts within the company itself.

Since the election day, Tesla shares have soared approximately 35%, with speculation that CEO Elon Musk's strong rapport with the newly elected President could yield advantageous changes, including relaxed regulations surrounding self-driving technology. As trading commenced Tuesday, the stock demonstrated slight recovery, hovering around $339.

Intraday Reversal Analysis

Following Donald Trump's electoral victory, Tesla shares had previously broken out from a bullish ascending triangle, continuing an upward trajectory for a week before entering a consolidation phase represented by a pennant chart pattern, indicating potential continued bullish momentum. However, the optimism hit a snag when shares peaked at their highest value in over two years on Monday, only to retract significantly, closing near the day’s low. Some market analysts pointed to a troubling head and shoulders-like pattern forming on the relative strength index (RSI), a potential signal of a weakening trend.

Key Support Levels for Investors to Monitor

Traders and investors should closely observe the $310 level on Tesla's chart, as this price point may attract buying interest given its proximity to the pennant pattern's low. A significant drop below this mark could lead to a descent to around $265, which represents nearly a 22% decline from Monday's closing price. This $265 level aligns closely with the ascending triangle’s upper trendline, coinciding with the rising 50-day moving average, implying a potential rebound zone.

Bullish Price Target to Keep an Eye On

To gauge future price movements, investors might utilize a bar pattern analysis, which assesses past price bars to predict forthcoming trends. By applying this technique to Tesla's chart, the price bars right before the pennant formation can be used to forecast potential resistance and price targets. If bullish momentum resumes, analysts project a target price of approximately $500, which could be attained if the stock embarks on a continued upward trend.

Tesla remains at the forefront of discussions amongst investors as the automotive industry navigates the complexities of electric vehicle regulations and market dynamics. Keep your eyes peeled for these critical price levels as they may signal significant opportunities for trading strategies in the near future!