Tesla Stock Bullish Pattern Points to a Rebound as New Catalysts Emerge

Key Insights

• Tesla stock has formed a large falling wedge pattern, pointing to a strong rebound.
• A rebound may push Elon Musk’s company from $400 to $500.
• The company may see more orders as the Iran war continues.

Tesla stock price continues to waver this month, and is trading at the crucial support level at $400, which is ~20% below its highest point in December last year. This consolidation may soon lead to a recovery as a rare chart pattern forms and key drivers emerge.

Tesla Stock Price Has Formed a Highly Bullish Pattern

The daily chart shows that TSLA stock has entered a bear market, falling from last year’s high of nearly $500 to the current $400.

A closer look shows the stock has formed a falling wedge pattern, which typically signals a strong comeback. The upper side of this pattern connects the highest levels since January this year.

Similarly, the lower side links the lowest swings since December 2025. In a falling wedge pattern, an asset normally rebounds when the two lines are nearing their confluence.

The stock is hovering near the 38.2% Fibonacci Retracement level, while the Relative Strength Index (RSI) has formed a bullish divergence.

This outlook suggests TSLA stock will rise in the coming days, with bulls targeting a record high of $500, ~25% above the current level.

On the flip side, a crash below the important support level at $382, its lowest level this year,  will cancel the bullish outlook and place it at risk of falling to the 50% retracement level at $357.

Tesla May Benefit as Gasoline Prices Jump

A potential driver for the upcoming TSLA stock price surge is the ongoing Iran-US war, which has driven energy prices higher.

Data compiled by AAA shows that the average gasoline price has jumped to $3.842, up sharply from last month’s $2.92. It has jumped by nearly 25% from the same period last year.

Gasoline prices may continue rising in the coming weeks as the war continues and the Strait of Hormuz remains shut. Iran has hinted that its goal is to drive crude oil prices to $200.

Higher gasoline and diesel prices may push more customers to buy electric vehicles, because they are often cheaper than Internal Combustion Engines (ICE).

If this transition happens, Tesla will be the biggest beneficiary, as it is the largest electric vehicle company in the United States. Also, major companies like General Motors and Ford have pared back their EV investment in the past few months, announcing huge write-downs.

Tesla is Becoming a Major Player in the AI Industry

Meanwhile, Tesla aims to become a major player in the booming artificial intelligence (AI) industry. For example, it has invested over $2 billion in xAI, the parent company of Grok and X, formerly known as Twitter.

This investment will benefit Tesla as AI valuations are rising, with a recent investment in OpenAI valuing at over $840 billion. Anthropic’s valuation jumped to over $380 billion.

In major news this week, Tesla confirmed that it will use Samsung to manufacture its chips at its Texas plant in a deal valued at over $16.5 billion. Also, in a statement last week, Elon Musk said that the company will launch its terafab product, which will enable it to build its chips.

Tesla’s AI and robotics business explains why Tesla is valued at a premium compared to other automotive stocks. The company trades at a forward earnings of 193, much higher than that of the S&P 500 Index, which has a multiple of 22. The average earnings multiple for the automotive sector is 14.

While Tesla is a highly overvalued company, it does not mean that the stock will continue falling. Historically, the company has traded at a higher valuation multiple than the broader market due to the Elon Musk premium. Also, investors are waiting for its Optimus product and its self-driving vehicles.

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