Tesla shares have stayed under pressure after failing at 413.23 on the one-hour chart and then sliding in a five-wave impulse labelled Wave ((III)) to 304.28. Price has since turned higher, consistent with an Elliott Wave corrective rebound in Wave ((IV)), which may extend in the near term. The move is still framed as corrective rather than the start of a new uptrend, implying a renewed fall once Wave ((IV)) ends, with the next leg expected to complete a higher-degree red Wave 3.
On the four-hour chart, the decline from 453.35 is also described as impulsive, with the current Wave ((IV)) recovery seen as temporary before the downtrend resumes. Over the larger timeframe, the projected destination remains the 290–189 range as the broader pullback from the 498.83 peak develops. In the next 24 hours, price may continue to rise within Wave ((IV)), but the rebound is capped below 413.23 under this setup.
Technical Correction and Broader Market Structure
We are currently tracking a temporary upward correction in Tesla (TSLA) after its sharp decline from the $413.23 peak down to $304.28. While we expect some near-term gains as this corrective bounce plays out, the broader structure points to more pain ahead. Derivative traders should view this brief recovery as an opportunity to prepare for short positions rather than a long-term buying opportunity.
Fundamental Headwinds and Derivatives Strategy
This cautious outlook is backed by Tesla’s shifting fundamentals, including its U.S. electric vehicle market share recently slipping below 50% as competition intensifies. Furthermore, Tesla’s automotive gross margin has faced severe pressure, dropping to around 14.6% from its historical highs of over 20% due to aggressive price cuts. Historically, when margin compression of this scale occurs, temporary stock rallies quickly run out of steam as institutional sellers step in.
For options traders, we recommend avoiding long-dated call options and instead watching for signs of exhaustion below the $413.23 level. As this corrective bounce stalls, buying put options with expiry dates over the next few weeks targeting the $290 to $189 range aligns well with our bearish target. Alternatively, traders can utilize bear call spreads to capitalize on the high implied volatility as the stock attempts to push temporarily higher.
