Tesla (TSLA) shares have witnessed a remarkable surge following Donald Trump's recent election victory, driven by optimism surrounding CEO Elon Musk's close relationship with the president-elect. Investors are excited about potential benefits for the electric vehicle (EV) manufacturer, especially after Trump appointed Musk to co-lead the newly formed Department of Government Efficiency (DOGE). This agency aims to trim government spending and eliminate unnecessary regulations, which could significantly impact Tesla's operations.

Since the election day, Tesla’s stock has skyrocketed by over 30%. However, in Wednesday afternoon trading, the shares saw a slight dip of approximately 1%, settling around $325 after peaking at $344 earlier in the day.

Key Technical Analysis: The Cup and Handle Breakout

Last week, Tesla shares broke above the top trendline of a classic cup and handle pattern, executing this breakout on the highest trading volume seen since early July. This pattern typically suggests strong bullish momentum, and indeed, the buying trend persisted into Monday before some investors decided to lock in profits during Tuesday’s session.

Important Support Levels to Monitor

As the stock experiences fluctuations, investors should closely watch the $300 mark. This price level is not just a psychological benchmark but also aligns with a trendline connecting multiple peaks that emerged between January 2021 and July 2022. A drop below this level could trigger a descent toward the $265 range, where the stock might find support near the cup and handle pattern's top trendline—potentially transforming from resistance to support.

Potential Price Pressure Above

On the upside, if Tesla continues its upward trajectory, the $400 price level stands as a critical area for investors. Expect significant selling pressure around this range as it approaches the company's all-time high of around $414 in November 2021. Furthermore, this price point is also relevant to a measured price target derived from the cup and handle formation. By adding the depth of the "cup" to the initial breakout point, the projected upside target approximately hits $395, just shy of the critical $400 level.

Conclusion: What Lies Ahead for Tesla?

With such a strong market sentiment fueled by political shifts and tangible policy changes, Tesla investors should remain vigilant. Keeping an eye on these critical price levels—both support and resistance—will be essential for navigating potential volatility in the coming weeks. Will Tesla’s stock rocket past its all-time highs, or will it take a breather? Stay tuned!