Oracle Shares Shed 3% on Tuesday

Oracle (ORCL) shares experienced a 3% decline on Tuesday following reports from The Information that discussions between the tech giant and Elon Musk’s xAI regarding a potential $10 billion server deal had come to an end. Musk later revealed on X that xAI had decided to develop its own system to have better control over the project’s timeline.

Key Takeaways

• Oracle shares dropped 3% after talks with xAI over a server deal ceased.
• A bearish engulfing pattern emerged on the Oracle chart, signaling a potential reversal.
• Potential support levels for Oracle shares include $134, $127.50, and $117.

Bearish Engulfing Pattern Emerges

Despite Oracle’s upward trajectory since the earnings-driven gap on June 12, a bearish engulfing pattern appeared on the stock’s chart on Tuesday. This pattern, characterized by a smaller bullish candle followed by a larger bearish candle that engulfs the first, suggests a slowdown in upward momentum and a possible trend reversal.

Additionally, while the stock price reached a higher high last week, the relative strength index (RSI) displayed a shallower high, indicating a technical divergence and hinting at a weakening uptrend.

By projecting a price target of approximately $150 based on a bars pattern from December 2023 to March and overlaying it from the April swing low, Oracle’s stock could potentially reach a level just 2.9% above its all-time high set on July 5 at $145.79.

Monitor These Key Retracement Levels

If Oracle’s stock continues to retrace in the coming trading sessions, investors should pay attention to three critical support levels:

1. $134: Initial support level where buying interest may emerge around the earnings gap low.

2. $127.50: A potential area of support marked by a horizontal line connecting multiple swing highs over the past year, coinciding with the rising 50-day moving average (MA).

3. $117: A key level where buyers could defend a trendline supported by various peaks and troughs as well as the 200-day MA.

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Source: TradingView.com