Is the Oracle correction over?
Oracle (ORCL) has been in the news lately due to market perception that its projected borrowing of about $170 B for AI build out cannot be covered through organic cash flow and the company may need to scale down its aggressive build out plans. Additionally, its links with OpenAI cast a shadow on this stock as Open AI is not expected to achieve positive cash flow into the late 2030s. Consequently, the stock has been aggressively sold and lost about 48% of its value from its peak of $346/per share in September 2025 to its low in Dec of $177/per share. The question then arises as to whether this selling will continue or is the stock set for a rebound. Incidentally, Oracle’s credit default swaps have blown out in recent weeks and remain high.
From a technical analysis perspective lets see what the charts tell us.
The correction which began on Sept 22nd has evolved into an impulsive five wave Ellliot sequence to the downside. This is marked in Roman numerals (I-II-II-IV-V) with the fifth wave ending on Dec 17th. What is most interesting in this wave sequence is that Wave III in itself could be seen as having evolved into another five-wave sequence as shown by numerals (1-2-3-4-5). This is followed by an upward A-B-C correction. This phenomenon is referred to as a “fractal pattern” where an identical five sequence is nested in a larger five wave sequence. Having completed an impulse five wave sequence down, the momentum is clearly to the downside. However, a corrective bounce can be expected at this juncture. If such a corrective A-B-C sequence evolves from here, keeping in line with seasonality as well as a Santa Claus rally, what would the upside target be?
To answer this question let us take a look at Fibonacci retracements for this same daily chart of ORCL. A number of upside targets appear possible. Firstly, price has to break through the downtrend line shown in red. This currently is at $210/share. If price breaks through this target, the 38.2% retracement lies further higher at $235/share. In view of the up move being corrective, it is expected to be a slow moving in nature.
In summary, ORCL has seen a significant blow to its share price for reasons mentioned above. In view of the impulsive nature of the down move, the primary trend is down, for now. However, corrective bounces could happen and targets for such a bounce have been identified. Things could change if Oracle management present a credible plan to cover their borrowings and this is then reflected in a narrowing of its credit default swap.
This illustration is for educative purposes only. If you have any questions or seek clarification please feel free to contact me at info@skmarketisghts.com. If not have a wonderful holiday and best wishes for 2026.
Sowmi Krishnamurthy Ph. D., CMT
SK Market Insights Ltd
