Oracle: Sharp Correction Tests Long-Term Support

Oracle (NYSE:ORCL) shares have come under heavy pressure after a strong multi-month rally earlier in the year, with the stock now sliding sharply toward its 200-day moving average. The technical trend has deteriorated meaningfully in the short term, though longer-term fundamentals tied to cloud infrastructure, AI workloads, and enterprise software demand remain supportive.

Technical Analysis: ORCL Breaks Down Below 50-Day, Eyes 200-Day Moving Average

ORCL recently closed near $189.97, extending a steep decline from the recent highs above $300.

Moving Averages: Trend Turns Bearish in the Short Term

• 50-day moving average (50-DMA): $247.20
• 200-day moving average (200-DMA): $212.93

Oracle is trading well below the 50-DMA and has now also slipped below the 200-DMA, signalling:

• A confirmed short-term bearish trend
• A breakdown in intermediate-term momentum
• Increased downside risk unless buyers reclaim the 200-DMA quickly

The 200-DMA, which had acted as reliable support earlier in the year, has now become a critical battleground.

Price Action: Lower Highs and Accelerating Selling Pressure

The chart shows:

• A clear series of lower highs and lower lows since the peak
• Strong downside candles with limited buying follow-through
• Failed bounce attempts near the 50-DMA

This structure is consistent with distribution rather than consolidation.

RSI Momentum: Near Oversold Territory

The RSI (14) is near 31, indicating:

• Momentum is approaching oversold conditions
• Selling pressure is stretched but not yet exhausted
• Potential for a short-term technical bounce

However, oversold RSI alone is not sufficient to signal a trend reversal without confirmation.

Volume: Selling Pressure Remains Elevated

Volume has increased during down days:

• Suggests institutional participation in the selloff
• Confirms bearish conviction
• No clear accumulation signals yet

Capitulation may be forming, but confirmation is still needed.

Key Levels to Watch

Support:

• $185–190 – Immediate support zone
• $175 – Next downside target if selling continues
• $160–165 – Major historical support area

Resistance:

• $213 (200-DMA) – Critical recovery level
• $225 – Prior consolidation zone
• $247 (50-DMA) – Major resistance; reclaim needed to stabilize trend

Until ORCL reclaims the 200-DMA, the technical bias remains bearish.

Fundamental Analysis: Oracle’s Cloud and AI Strategy Still Compelling

Despite the sharp technical correction, Oracle’s underlying business fundamentals remain relatively strong.

1. Cloud Infrastructure Growth Accelerates

Oracle Cloud Infrastructure (OCI) continues to post strong growth:

• Increasing demand for AI training and inference workloads
• Expansion of high-performance compute offerings
• Competitive positioning against hyperscalers for AI-heavy workloads

OCI has become one of Oracle’s most important long-term growth engines.

2. AI Demand Drives Enterprise Interest

Oracle is benefiting from AI-driven enterprise demand:

• Partnerships with AI model providers
• Strong uptake of GPU-enabled cloud services
• Long-term contracts that improve revenue visibility

AI workloads tend to be sticky and high-margin over time.

3. Stable Database and Enterprise Software Revenues

Oracle’s core database and applications business remains resilient:

• Mission-critical software with high switching costs
• Strong renewal rates
• Gradual migration from on-premise to cloud subscriptions

This provides a dependable cash-flow foundation.

4. Margins and Cash Flow Remain Solid

Despite heavy cloud investment:

• Oracle continues to generate strong operating cash flow
• Margins remain healthy relative to peers
• Debt levels are manageable given predictable enterprise revenue

This helps cushion the stock during periods of market volatility.

5. Valuation Reset After Sharp Rally

Following the correction:

• Valuation multiples have compressed meaningfully
• Expectations have been reset after an aggressive run-up
• Long-term investors may view stabilization as an opportunity

However, fundamentals alone may not immediately halt technical weakness.

Overall Outlook: Bearish Short-Term, Constructive Long-Term

Short-term view:

• Bearish while ORCL trades below the 200-DMA
• RSI near oversold could trigger a technical bounce
• Trend remains fragile without a recovery above $213

Medium-term view:

• Base-building possible if $185–190 holds
• Failure here opens downside toward $175

Long-term view:

• Constructive, supported by cloud infrastructure growth, AI demand, and enterprise software strength
• Volatility likely as market digests prior excess optimism

The share is undergoing a sharp technical correction that has damaged short-term trend structure. While fundamentals tied to cloud and AI remain solid, the stock must stabilize above key support levels before confidence in a sustained recovery can return.