Key Takeaways
- Oracle shares will likely remain in focus on Tuesday after jumping more than 5% to a new record high yesterday following recent bullish coverage from investment firms.
- Gains in the stock accelerated last week on the highest trading volume since mid-December, though the relative strength index indicates overbought conditions, potentially leading to short-term profit taking.
- Investors should monitor key retracement levels on Oracle’s chart at $145 and $127.
- A bars pattern price target, which extracts the stock’s trending move following a retest of a prior ascending triangle in late January 2021 and repositions it from the current pattern’s retest area, projects a profit target of around $215.
Oracle (ORCL) shares will likely remain in focus on Tuesday after jumping more than 5% to a new record high yesterday following recent bullish coverage from several investment firms.
Jefferies analysts lifted their price target on the stock to $190 from $170 over the weekend, while New York-based Melius Research on Monday upgraded the shares to a “buy” rating, with both firms impressed with the software giant’s advancements and growth opportunities in the cloud computing market.
Oracle shares have gained 22% so far in September through Monday’s close, paving the way for their best month since October 2022. Investors cheered the company’s better-than-expected earnings report, which was announced last week alongside a new partnership with Amazon’s (AMZN) cloud computing unit as Oracle continues to expand its artificial intelligence (AI) footprint.
The stock was up 0.6% at $171.30 in recent premarket trading Tuesday.
Below, we’ll take a close look at the technicals on Oracle’s weekly chart and identify important price levels to watch out for.
RSI Indicator Flashes Overbought Conditions
After rallying to a new record high in mid-July, Oracle shares retraced to the top trendline of an ascending triangle before resuming their longer-term uptrend in early August.
More recently, gains accelerated last week on the highest trading volume since mid-December, though the relative strength index (RSI) indicates overbought conditions, with a reading above the 70 threshold. Consequently, the stock may see short-term profit taking before potentially making another trending move higher.
Key Retracement Levels to Monitor
During pullbacks, investors should monitor two key price levels.
The first sits at $145, an area on the chart where the shares may initially find support near last week’s earnings breakout point and a series of comparable trading levels positioned around the July peak.
A deeper retracement could see the stock retest the $127 level, the same location where the price found buying interest last month near the ascending triangle’s top trendline. This region also finds added support from the upward sloping 50-day moving average.
Bars Pattern Price Target
To forecast a potential price target above the all-time high (ATH), we can use a bars pattern. To do this, we extract the stock’s trending move following a retest of a prior ascending triangle in late January 2021 and reposition it from the current pattern’s retest area. Such a technique projects an upside target of around $215.
It’s also worth pointing out the prior trending move occurred over 45 trading days, meaning that the stock’s current uptrend from last month’s low could play out until early June next year if price history rhymes.
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