Oracle Price Levels to Watch as Stock Sets Record High

Oracle (ORCL) shares hit a record high Wednesday following a report that ChatGPT maker OpenAI is looking beyond Microsoft (MSFT) to supply servers, paving the way for a potential new partnership with the enterprise software giant.

Tech industry focused publication The Information reported that OpenAI’s leadership recently told staff that the company planned to take on a larger role in securing data centers and artificial intelligence (AI) chips, rather than relying exclusively on Microsoft.

In June, the company rented Oracle servers at a new data center in Texas with limited input from Microsoft, according to the report. At the time, OpenAI’s CEO Sam Altman said that the software company’s Oracle Cloud Infrastructure (OCI) would allow it to scale, while Oracle CEO Larry Ellison pointed out that AI leaders such as OpenAI are turning to the company for its fast, cost-effective AI infrastructure. 

Oracle shares have surged around 25% in the past month and gained nearly 70% year-to-date through Wednesday’s close, boosted in part by a recent multicloud partnership with Amazon’s (AMZN) cloud business.

The stock rose 2.3% to close Wednesday's session at $178.29, after hitting an all-time high of $178.61.

Below, we take a closer look at Oracle's weekly chart and use technical analysis to point out important price levels to watch out for.

Rising Wedge Breakout

Oracle shares traded within a three-year rising wedge before staging a decisive volume-backed breakout above the pattern last month.

Since that time, the stock has continued to trend sharply higher, though share turnover has decreased following the initial breakout.

While, the relative strength index (RSI) confirms bullish price momentum, it also cautions of short-term overbought conditions with a reading above 80. It’s worth pointing out that the last time the indicator flashed above this threshold in June last year, the stock underwent a correction of around 22% over the following six months.

We’ll now identify three important lower chart area that could come into play during pullbacks and use a bars pattern to project a price target if the stock continues its long-term uptrend.

Lower Chart Levels to Watch

The first location to monitor sits around $146, an area on the chart where the shares could find initial support around the July swing high and wedge pattern’s top trendline.

Selling below this level could see the shares revisit the $127 level, a region just below the wedge’s lower trendline that would likely encounter support from multiple highs on the chart between June 2023 and May this year, which also closely aligns with the 2024 August low and upward sloping 50-week moving average (MA).

A deeper correction could bring the psychological $100 round number into play. Investors would likely look for buying opportunities in this area near the closely-watched 200-week MA and prominent peaks and troughs that formed on the chart from October 2021 to December last year.

Bars Pattern Price Target

A bars pattern uses historical trends to predict future moves. To apply this technique on Oracle’s chart, we take the stock’s trend higher from October 2022 to June last year and overlay it from the August low, which projects a price target of around $250.

We selected this earlier trending period because it began from the rising wedge’s lower trendline, similar to how the stock’s current move higher started. Interestingly, the prior trend played out over 36 weeks, meaning a comparable move could potentially last until early April if price history were to rhyme.

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As of the date this article was written, the author does not own any of the above securities.