FXOpen
Yesterday, Oracle (ORCL) shares dropped by 5% following reports that investment firm Blue Owl Capital had withdrawn from financing a $10bn data centre project in Michigan.
The collapse of the deal raises questions over Oracle’s ability to meet its commitments under large-scale contracts (including a $300bn agreement with OpenAI) without further straining its balance sheet.
According to media reports, the company’s total debt has climbed to $111bn. The recent share price decline reflects growing concerns that Oracle’s “credit bubble” may struggle to withstand the AI arms race, making it increasingly difficult for the company to secure funding for its ambitious construction projects.
As a result:
→ ORCL shares fell below $180 for the first time since mid-June;
→ the chances of returning to the previously established ascending channel now look slim.
However, technical analysis of the ORCL chart highlights four factors that could support a rebound:
1 → The price has filled the bullish gap formed in mid-June;
2 → The share price has fallen by around 50% from its all-time high set in early September, which may attract risk-tolerant buyers looking to pick up a stock that has halved in value;
3 → The price is trading close to the lower boundary of the descending channel that frames the current decline;
4 → Yesterday’s surge in trading volumes may signal panic selling, which often precedes a rebound.
A fifth factor could be an oversold signal from your chosen oscillator.
That said, even if ORCL shares begin to recover, the upside may be capped by a key resistance zone (marked in blue), which formed after a bearish gap above the psychological $200 level following the quarterly earnings release.
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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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