TSLA: Watching Prior Resistance Turn into Key Support

Introduction & Thesis

Tesla (TSLA) is currently presenting a textbook technical setup on the daily chart. After a strong uptrend from May to October, the price has pulled back to a critical zone that previously acted as heavy resistance in early 2025. This analysis explains why this level is a crucial 'make-or-break' point for the bulls.

The Breakout and The Retest

Observe the orange rectangle (approx. $410 - $425). This region was a significant ceiling for the price action earlier this year. According to technical theory, once a strong resistance level is decisively broken (which occurred in September), it is expected to flip its role and become a crucial support level. This is often referred to as a Prior Resistance Turned Support (PRS) area.

The price is currently pulling back right into this PRS zone, a common and healthy movement known as a retest.

Confluence of Support

Crucially, the 30-day Exponential Moving Average (EMA 30), which defines the short-term trend, is also converging with this key support zone. This creates a powerful confluence of support, significantly increasing the probability of a bounce. The long-term trend, indicated by the upward-sloping 200-day EMA (green line), remains firmly bullish, supporting the overall upward bias.

Scenarios
🎯 Bullish Scenario (The Bounce)
If the $410 - $425 zone holds and we see a strong bullish rejection candle (e.g., a hammer or engulfing pattern), it would confirm the support flip, suggesting the next leg of the rally towards the recent highs around $475.

🛑 Bearish Scenario / Invalidation (The Failure)
Conversely, a sustained daily close below $410 would be a crucial failure signal. This would invalidate the bullish retest thesis and suggest a deeper correction is underway, likely targeting the next major support zone around the 200-day EMA (currently near the $343 region).

📚 Educational Takeaway
This setup perfectly illustrates how traders look for confluence. The strongest support zones are those where multiple technical factors—like a former resistance level (PRS) and a strong moving average (EMA 30)—converge. A successful bounce here reinforces the power of market structure principles.

(Disclaimer: This is for educational purposes only and not financial advice.)