BAE Systems share price jas done well in the past few months, moving from a low of 1,588p in December to a high of 2,160p. It then pulled back to the current 1,973p. This article explores why the BA stock may pull back after forming an island reversal and a bearish engulfing pattern.

BAE Systems share price technical analysis 

The daily timeframe chart shows that the BA stock has remained under pressure in the past few days, moving from a high of 2,159p on January 19 to the current 1,973p.

It has formed a series of risky chart patterns, pointing to more downside in the coming weeks. For example, it formed a shooting star pattern on January 19. This pattern is made up of a long upper shadow and a small body.

The stock has formed a bearish engulfing pattern, which is characterized by a big red candle that follows and fully covers a small bullish one. This pattern also leads to a big reversal over time.

Most importantly, the stock has formed an island reversal pattern, which happens after an asset jumps and forms a gap. In this case, this gap happened on January 7 as geopolitical risks rose following Donald Trump’s arrest of Nicholas Maduro.

The two lines of the MACD indicator have formed a bearish reversal pattern and are pointing downwards. Also, the Relative Strength Index (RSI) has moved from the overbought level at 84 to the current 55.

Therefore, the most likely scenario is where the BAE Systems share price continues falling as sellers continue filling the gap, a move that will bring it to the key support level at 1,900p, which coincides with the highest point in October last year.

BAE Systems chart | Source: TradingView

BAE Systems’ business is doing well and has major catalysts 

The bearish outlook for the BAE Systems stock price is based on its technicals. Its fundamentals show that the company is doing well as demand for military equipment in the United States and Europe rise.

Donald Trump has called for defense spending to jump from the current $1 trillion a year to $1.5 trillion, a figure that is much higher than other countries combined. While such a move will hurt America’s finances, it will benefit defense contractors, of which BAE Systems is one of the biggest ones.

Trump has also pushed NATO member countries to boost their defense spending to 5% of their GDP from the current 2%. Such a move will likely lead to more demand for BAE Systems equipment over time.

Index, the most recent results showed that the company’s sales are growing. Its sales rose from £13.4 billion in the first half of 2024 to £14.6 billion, while its adjusted EBIT moved to £1.6 billion from the previous £1.4 billion.

The company ended that period with a backlog of £75 billion pounds and a pipeline of £180 billion. This growth will come from its diverse revenue sources across key industries like electronic systems, air, maritime, cyber, and intelligence, and platforms & services.

At the same time, the company continues to return funds to investors. It returned £1.5 billion to investors through a combination of dividends and share buybacks. 

The next key catalyst for the BAE Systems share price will be its earnings, which will come out on February 18. Analysts expect the results to show that its revenue will be £31 billion, while its underlying EBIT will be over £3.3 billion.

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The recent crypto crash continued on Monday as Bitcoin and most altcoins remained in the red amid rising geopolitical jitters. Bitcoin dropped to $87,380, while Ethereum, Dogecoin, Solana, and XRP fell by over 3% in the last 24 hours.

Crypto crash continues as liquidations jumped 

One key reason behind the ongoing crypto market crash is that liquidations continued rising. Data compiled by CoinGlass shows that liquidations soared by 770% in the last 24 hours to $678 million. 

Ethereum liquidations jumped to over $218 million, while Bitcoin liquidations jumped to $195 million. Solana liquidations jumped to $63 million. The other top liquidated tokens were XRP, Zcash, and Dogecoin.

Liquidations happen when crypto exchanges close leveraged trades when their losses jump and reach the margin level. They close these trades to protect the capital they lend to the traders.

The ongoing liquidations surge coincided with the decline in the futures open interest. Data shows the open interest dropped by 2.15% on Monday to $128 million, down from the October high of over $255 billion.

Open interest refers to the outstanding options contracts in the crypto industry. A higher figure is a sign of higher demand for cryptocurrencies.

Geopolitical jitters are rising 

The crypto crash is happening amid the ongoing geopolitical jitters in the United States and other countries. First, there are signs that the United States will attack Iran this year now that Donald Trump has sent an armada of warships in the region. 

Such a move would lead to higher oil prices and the biggest geopolitical crisis in the Middle East. Data compiled by Polymarket shows that the odds of an attack by June have jumped to 65%.

At the same time, Donald Trump has threatened Canada with huge tariffs because of its recent deal with China. The deal will see China export up to 49,000 vehicles to Canada a year and pay a 6% tariff, down sharply from 100%. This move will benefit top Chinese companies like BYD and Nio.

US government shutdown odds are rising 

The crypto market crash is also happening because of the ongoing jitters on the US government funding. Polymarket data shows that the odds of a government shutdown jumped to over 70%.

These odds rose as protests continued in the past few days after a Border Patrol Agent shot and killed an American. A government shutdown would affect the ongoing economic recovery and lead to more volatility in the market.

The shutdown jitters are rising ahead of the upcoming Federal Reserve interest rate decision. Economists expect the bank to leave interest rates unchanged between 3.50% and 3.0%.

Bitcoin price technicals

The ongoing crypto market crash is also happening because of Bitcoin’s weak technicals. The daily timeframe chart shows that Bitcoin has remained below all moving averages and the Supertrend indicator. That is a sign that bears have remained under pressure. 

Bitcoin has also formed a bearish flag pattern, which happens after a major dip, which is then followed by a consolidation. 

Therefore, there is a likelihood that the BTC price will have a strong bearish breakout, which may lead to more downside among altcoins.

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Solana price dropped to a crucial support level on Monday morning as Bitcoin and most altcoins retreated. It plunged to a low of $117.38, its lowest level in December last year, and 52% below the September high of $253. This article explores why SOL price slumped despite its strong fundamentals.

Solana price dropped as its fundamentals improve 

SOL price remained on edge as third-party data showed that its fundamentals remained strong ahead of the upcoming Alpenglow upgrade, which is set to happen either in February or March.

Data compiled by Nansen shows that Solana’s transactions and fees continued rising in the past 30 days, making it the most active network in the crypto industry.

Solana’s network handled over 2 billion transactions in the last 30 days, much higher than what other networks like Ethereum, Base, and BSC Chain handled. Its active addresses jumped by 43% to over 85.3 million.

This transaction growth was due to its strong performance in the meme coins, decentralized exchange (DEX), stablecoins, and real-world asset (RWA) tokenization industry.

This growth led to a jump in network fees, which is important as Solana burns its fees, reducing the circulating supply. Fees jumped by 53% in the last 30 days to over $21 million, making it the second largest chain after Tron, which made over $27 million in fees.

Solana’s metrics are much better than those of Ethereum by far. For example, while its transaction count jumped to over 2.07 billion, Ethereum handled over 64 million transactions in the same period. Also, its fees were much higher than Ethereum’s 10 million.

More data shows that its DEX network is thriving and beating Ethereum. Its DEX volume rose to $107 billion in the last 30 days, higher than Ethereum’s $45 billion and BSC’s $47 billion. The top DEX protocols on Solana were Pump.fun, BisonFi, HumidiFi, Meteora, Raydium, and Jupiter.

Meanwhile, spot Solana ETFs did better than Bitcoin and Ethereum last week, a sign of resilient demand. These funds attracted over $9.5 million in inflows last week, meaning that they have never had a weekly outflow. In contrast, spot XRP ETFs shed over $40 million in assets last week. Bitcoin and Ethereum ETFs shed over $1.3 billion and $611 million, respectively.

Therefore, Solana’s price is dropping because of external factors, including the ongoing crypto market crash. This decline is happening as investors react to the ongoing geopolitical tensions, as the US builds an armada in the Middle East. Donald Trump has also continued to warn about new tariffs against Canada.

SOL price prediction: Technical analysis 

The three-day timeframe chart shows that the SOL token has crashed from a high of $253 on September 16 last year to a low of $117.38. It has remained below the 50-day and 100-day Exponential Moving Averages (EMA).

The coin has now formed a bearish flag, which happens after a big drop. Its lower side is at $117.38. It has moved below all moving averages and the Supertrend indicator.

Therefore, a drop below the key support level at $117.38 will point to more downside, potentially to the key support level at $95, its lowest level on April 7. Such a drop would point to a 23% decline below the current level.

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Lloyds Bank share price continued its strong rally as investors reacted to the recent US bank earnings and as traders focused on the upcoming earnings and as traders focused on its upcoming earnings. It was trading at 101.65p, up by 75% from its lowest level in April last year.

Lloyds Bank to publish its financial results this week

Lloyds Bank stock remained above the important resistance level at 100p this month as American banks released their financial results, which showed that their businesses continued doing well.

The company will publish its financial results this week, which will provide more information about the fourth quarter and the full year. 

Its consensus numbers show that analysts expect its business to have a strong performance in Q4 as the UK economy stabilized.

The net interest income is expected to come in at £3.54 billion, up from £3.451 billion in the previous one. Its other income, which includes ATM fees, wealth management, service charges, and rent from owned properties, continued rising, reaching £1.55 billion.

If these estimates are accurate, it means that it’s net interest income (NIM) for the year will be £13.648 billion, up from £12.84 billion a year earlier. The other income will be £6.08 billion, up from £5.5 billion from a year earlier.

The consensus report shows that its Q4 profit rose to £1.2 billion, bringing the annual figure to £4.57 billion. 

Lloyds, like other European banks, has benefited from the relatively high interest rates in the UK as inflation has remained at an elevated level. 

City analysts believe that the Bank of England will maintain rates higher for longer as UK inflation has remained much higher than the target of 2.0%. The most recent data showed that the headline Consumer Price Index (CPI) rose 3.4% in December.

The company has also benefited from its cost-cutting measures, including the increasing usage of digital banking technology. City analysts believe that the cost-income ratio dropped to 59.6% in the fourth quarter from the previous 68.4%. This figure is expected to keep going downwards, moving from 60.4% in 2024 to 47.2% in FY’28.

At the same time, the asset quality ratio is expected to keep rising, moving from 0.1% in 2024 to 0.27% in FY’28. More shareholder return data are also expected to keep growing in the coming years, with the dividend per share moving from 3.17p in 2024 to 5.77p in 2028. Its share buyback is expected to move from £1.7 billion in 2024 to £3 billion in 2027.

The other key catalyst for the Lloyds share price will be its falling remediation costs, which are expected to move to £1 billion in 2025 from £899 million in 2024. These costs will be because of the motor insurance crisis. It will then continue falling to £248 million in 2028.

Lloyds share price technical analysis 

The daily timeframe chart shows that the Lloyds share price has been in a strong uptrend in the past few months and is now trading at its highest level since 2008. It has formed an ascending channel and is now hovering near its upper side.

The two lines of the Percentage Price Oscillator have formed a bearish crossover pattern. Also, the Relative Strength Index (RSI) has pointed downwards.

Therefore, the most likely scenario is where the LLOY stock price pulls back after earnings as investors start booking profits. If this happens, the next next key level to watch will be at 95p, the lower side of the ascending channel 

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The USD/CAD exchange rate crashed to the lowest level since January 5 as the US dollar index retreated after the Greenland crisis eased. It plunged for five consecutive days in its longest losing streak since May 2025. 

Donald Trump threatens Canada tariff 

One key catalyst for the USD/CAD exchange rate will be a threat by Donald Trump to punish Canada with a 100% tariff on all its exports to the US, including on goods covered by the USMCA deal he negotiated.

Trump is angry that Canada reached a trade deal with China that lowers tariffs on Chinese electric vehicles to 6%. In exchange, China removed canola tariffs it had put in place a few years ago.

Most importantly, he is disappointed with a speech Mark Carney delivered at the World Economic Forum (WEF) in Switzerland last week. Carney criticized the ongoing power games by the largest economies in the world and asked middle countries to team and respond to these measures.

The statement was mostly targeted towards Trump, who had threatened to take Greenland, a semi-autonomous island with ties to Denmark.

A 100% tariff on goods from Canada would be a big deal because of the vast amount of goods that flow to the United States from Canada. Also, Canada is the biggest US trade partner, buying goods worth billions of dollars a year.

Still, Trump is known for TACO, a phrase that means Trump Always Chickens Out, as he did on the Greenland issue last week. After threatening to take over the island, he reached a deal that brought no major changes to the existing agreement. 

Bank of Canada interest rate decision 

The next major catalyst for the USD/CAD exchange rate is the upcoming Bank of Canada interest rate decision that will come out on Thursday.

Economists believe that the bank will decide to leave interest rates unchanged at 2.25% to give policymakers a chance to digest more macro data.

Recent numbers have sent mixed messages about the Canadian economy. For example, the country’s labor market slowed substantially in December after growing in the previous three consecutive months. At the same time, a report released last week showed that Canada’s inflation rose more than expected in December.

Most analysts believe that the bank will then leave interest rates unchanged at the current level for the rest of the year. In a statement to Reuters, an analyst said:

“At this point, the BoC is ready to take a fairly long wait-and-see stance. If there’s a risk of a move, it’s more likely to be a cut than a hike this year.”

Federal Reserve interest rate decision 

The other major catalyst for the pair will be the upcoming Federal Reserve interest rate decision, which will come out on Wednesday.

Like the BoC, analysts believe that the Federal Reserve will leave interest rates unchanged between 3.50% and 3.75% in this meeting.

The US has released encouraging macro data recently. A report released last week showed that the US GDP expanded by 4.4% in the third quarter, better than the median estimate of 4.3%.

Another report showed that the labor market has started to improve in the past few months, while inflation has been a bit constrained.

USD/CAD Technical Analysis 

USD/CAD chart | Source: TradingView

The daily timeframe chart shows that the USD/CAD exchange rate has been in a strong downward trend in the past few days, moving from a high 1.3925 on January 16 to the current 1.3700.

The pair has dropped below the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bears are in control.

Also, the Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have all pointed downwards.

Therefore, the most likely USD/CAD forecast is bearish, with the next key target being at 1.3640.

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The Australian dollar surged to the highest level in years, making it one of the best-performing currencies this year. The AUD/USD exchange rate rose for five consecutive days, reaching a high of 0.6895, much higher than the year-to-date low of 0.6662. 

Australian dollar has surged amid potential RBA and Fed divergence

The main reason why the AUD/USD exchange rate has surged in the past few months is the rising optimism that the Federal Reserve will diverge with the Reserve Bank of Australia (RBA).

Most analysts now believe that the RBA will decide to hike interest rates by 0.25% in the next meeting because of the ongoing performance of the economy.

A report released last week showed that the Australian labor market continued growing in December. The economy added over 60,000 jobs, most of which were full-time. 

It also showed that the unemployment rate improved, while the participation rate rose. Everything in this report was much better than what analysts were expecting.

The next key catalyst that will determine whether the bank will hike rates will be the upcoming Australian inflation report that comes out on Wednesday this week. Economists exect the report to show that the headline consumer inflation rose 0.9 per cent in December, leading to a 3.6% annual increase. 

The closely-watched trimmed and weighted mean CPI number is expected to remain above 3%. Therefore, if these numbers are accurate, it means that the RBA will hike rates from the current 3.6% to 3.85% in the next meeting.

The rising odds of RBA rate hike explains why bond yields have surged in the past few months. Data shows that the ten-year yield rose to 4.85%, its highest point since December last year. 

On the other hand, analysts believe that the Federal Reserve will deliver more rate cuts this year despite the strength of the American economy. The unemployment rate and the headline and core inflation rates are still contained, while the economic growth is strong.

Therefore, the Fed and RBA divergence will create a carry trade opportunity where investors borrow the cheaper US dollar to invest in the higher-yielding Aussie.

AUD/USD technical analysis 

AUD/USD pair chart | Source: TradingView

The weekly chart shows that the AUD/USD exchange rate has been in a strong bull run in the past few months. It jumped to a high of 0.6896, its highest level since September 2024. 

The pair has moved above all moving averages and formed an inverted head-and-shoulders pattern. These patterns often lead to more upside. Also, the Relative Strength Index (RSI) and the MACD indicators have all pointed upwards. 

Therefore, the most likely scenario is where the pair continues rising, with the next key level to watch being at 0.7000. A drop below the support at 0.6680 will invalidate the bullish outlook.

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The S&P 500 Index and its top ETFs, like the VOO and SPY, remained in a tight range near their all-time high last week. It was trading at $6,915, a few points below its all-time high of $6,980. This article explores some of the top catalysts for the index next week.

S&P 500 Index to react to government shutdown threat

The first key catalyst for the S&P 500 and its ETFs, like SPY and VOO, is the latest threat for a government shutdown in the United States. In a statement, Chuck Schumer, the Senate Minority Leader, vowed to block a massive spending package this week.

He wants Republicans to stop funding the Department of Homeland Security after a Border Patrol agent shot and killed an American citizen in the ongoing protests in Minnesota. The government shutdown will likely happen this week.

In most cases, the S&P 500 Index and other US indices like the Dow Jones and the Nasdaq 100 ignore government shutdowns because they always get resolved. For example, they all jumped to record highs after the longest government shutdown happened last year.

Top corporate earnings

The other major catalyst for the S&P 500 Index will be corporate earnings by some of the biggest companies in the United States.

Top members of the Magnificent 7, like Microsoft, Meta Platforms, Tesla, and Apple, will release their numbers this week, while Google and Amazon will publish theirs next week.

These are usually the most important earnings events in the United States because of these companies’size, with their market capitalization rising to over $16 trillion.

Most importantly, these firms are at the forefront of the artificial intelligence (AI) industry and are the biggest clients of NVIDIA, a company that has fueled the boom.

Therefore, a sign that their capital spending will continue will be highly bullish for the stock market. However, a sign that they plan to cut spending will be highly bearish for the market.

Additionally, hundreds of S&P constituent companies like Boeing, UnitedHealth, RTX, Mastercard, Visa, Chevron and ExxonMobil will also release their earnings.

A report by FactSet shows that 13% of the companies in the S&P 500 Index have published their earnings report, with the average earnings growth of 8.2%.

Federal Reserve interest rate decision 

The S&P 500 Index and its ETFs will also react to the upcoming Federal Reserve interest rate decision on Wednesday.

Economists believe that the bank will pause its interest rate cuts by leaving them unchanged between 3.50% and 3.75%. Officials will do that so that their recent cuts can take effect in the United States.

The bank has delivered three cuts in the current cycle, with officials signaling that there will be one more cut this year. Recent macro data confirm that there is no need to cut rates this cycle as the economic growth has accelerated.

A report released last week showed that the US GDP expanded by 4.4% in the third quarter, with analysts expecting it to expand by 5% in Q4. 

US and Canada relations 

The other minor catalyst for the S&P 500 Index is the relationship between the United States and Canada, two countries that do trade worth billions of dollars a year.

In a statement during the weekend, Trump warned that he would implement a 100% tariff on Canada if it inks a trade deal with China. He said that in response to a deal that allows China to ship electric vehicles to Canada and pay a 6% tariff.

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Meta Platforms stock price popped by over 5% on Thursday, adding billions of dollars in value. It rose to a high of $647, up by 11% from its lowest level in November last year. This article explores why the META stock rose and what to expect ahead of the upcoming earnings.

Meta Platforms stock price jumped as analysts remained optimistic 

The main reason why the Meta stock price has rebounded is that analysts are upbeat about the company. In an update on Thursday, Brent Hill, a Jefferies analyst, reiterated his bullish outlook, with his target rising to $910. That forecast points to a 40% from the current level.

Most Wall Street analysts have maintained a bullish outlook, with Rosenblatt hiking the outlook to $1,117, up by 77% from the current level.

Similarly, Cantor Fitzgerald analysts boosted the target for Meta stock price from $720 to $750, while Citizens expects it to rise to $900.

However, some analysts have lowered their targets in the past few days, with Guggenheim reducing the target from $875 to $800. Others who have lowered the outlook are Baird, Wedbush, and Morgan Stanley.

As a result, the consensus price target for the Meta Platforms stock price stands at $821, with 41 analysts having a buy rating and 7 of them having 7 hold ratings. The consensus target is 26% above the current level.

Meta Platforms stock price also jumped after the company announced a new round of layoffs in a bid to cut costs. Data shows that the company will lay off 331 workers in Seattle and 270 in California. Most of these workers are from its Reality Labs business.

Additionally, Meta stock jumped after the company announced plans to start monetizing it Threads product through advertising. 

Meta earnings ahead 

The next key catalyst to watch will be the upcoming earnings, which will provide more information about the company and its growth.

Wall Street analysts are optimistic that Meta’s revenue and profitability growth continued in the fourth quarter as the advertising business boomed. 

The average estimate is that the company’s revenue rose by 20% in the fourth quarter of last year to $58.3 billion, while its earnings-per-share (EPS) rose from $8.02 to $8.2. If accurate, analysts expect that the annual revenue rose by 21.2% to over $200 billion.

Meta Platforms is expected to continue growing this year, rising by 18% to $235 billion. This growth will continue growing even as its key products continue to deteriorate.

For example, Meta Platforms’ Facebook is widely seen as a platform for old people, while Instagram is facing substantial competition from other fast-growing social media platforms like TikTok. Additionally, WhatsApp has become more difficult to monetize despite its popularity.

Most importantly, there are signs that Meta Platforms’ entry into the artificial intelligence industry has yet to become successful, with its chatbots having a negligible market share compared to xAI, ChatGPT, and Claude. 

Meta stock price technical analysis 

Meta stock chart | Source: TradingView 

Technical analysis suggests that the META stock price could be on the verge of a strong rebound in the coming weeks, potentially after the recent earnings. 

It has formed a double-bottom pattern at $598 and a neckline at $710, its highest level in December last year  

Meta Platforms stock has also formed an island reversal pattern, which happens when an asset makes a big gap. In most cases, this gap leads to a bullish reversal.

Therefore, the most likely scenario is where the stock rebounds, potentially to $700 and above after its earnings. However, a drop below the key support at $598 will invalidate the bullish outlook.

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Plug Power stock price jumped by 16% on Thursday, its best day in months, after the company tweaked a key deal with Walmart. It soared to a high of $2.60, its highest level since November last year. So, is this a dead-cat bounce or will the rally be sustained?

Why the Plug Power stock jumped 

Plug Power share price jumped by over 16%, catching many short-sellers by surprise. This rebound happened after the company and Walmart tweaked their agreement, a move that will lead to lower dilution.

The deal will see Walmart stepping away from exercising a warrant, which gave it the right to buy more than 55 million shares. In such a situation, Plug Power would have issued 42 million shares to honor the original goal.

In a statement this week, Walmart said that it had forfeited 30 million shares and another 7 million that had not vested yet. In exchange, Plug Power agreed to a licensing deal with Walmart. 

The announcement came as Plug Power’s business continues to struggle and risks of future dilution continue. Data shows that the company’s outstanding shares have been in a strong uptrend in the past few years, moving from a low of 566 million in 2021 to 1.2 billion today.

This dilution has continued despite the company receiving cheap financing from the Department of Energy, which gave it a $1.6 billion loan.  

Additionally, the hydrogen industry has not become as popular as was widely expected in the past. For example, the chances of hydrogen vehicles becoming popular have dropped in the past few years, with a company like Toyota ending production.

While hydrogen is a source of green energy, its costs are usually substantial and most potential customers would prefer using other forms of energy. This explains why the energy source has not become popular in the data center industry.

The most recent results showed that Plug Power’s business generated $177 million, an increase from the $173 million it made in the same period the previous year. Most of this revenue came from the sale of its equipment, which made $96 million. Its equipment sales dropped from $107 million.

Plug Power’s power purchase agreements made $24 million, up from $20 million, while fuel delivery to customers made $35 million.

The company continued losing millions of dollars, while its net loss rose to $363 million. This loss-making will likely continue in the foreseeable future.

Plug Power share price technical analysis 

The daily timeframe chart shows that the Plug Power stock price has retreated in the past few months, moving from a high of $4.56 on October 6 to the current $2.60. 

A closer look shows that the stock has formed a bearish flag pattern, which is made up of a vertical line and an ascending channel. This pattern often leads to more downside.

The stock remains below the 50% Fibonacci Retracement level. Therefore, the most likely scenario is where it continues falling, potentially to the key support level at $2.  A move below the key support level at $2 will raise the odds of it falling to the $1.54, which will benefit its substantial short sellers.

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Oracle stock price continued its downtrend this year, moving to its lowest level since June last year. It has crashed by nearly 50% from its highest level in October last year, with its market capitalization falling from $935 billion to the current $511 billion. This article explores why it has more downside to go ahead of its earnings.

Oracle stock technical analysis points to more downside 

The daily timeframe chart shows that the ORCL stock peaked at $345 in September last year when it published its strong financial results.

It has been in a freefall since then and has now plunged to $176. Technicals suggest that the stock has more downside as it has formed a death cross pattern, which happens when the 50-day and 200-day Exponential Moving Averages (EMA) cross each other. 

The stock has moved slightly below the key support level at $177, invalidating the double-bottom pattern whose neckline is at $207. It has dropped below the 61.8% Fibonacci Retracement level.

The Supertrend indicator has turned red, a sign that bears remain in control. Also, the Relative Strength Index (RSI) and the MACD indicators have continued falling in the past few weeks.

Therefore, the most likely scenario is where the stock continues falling, with the next key target being at $166, the 78.60% Fibonacci Retracement level. 

This target is about 7.6% below the current level. A drop below this level will point to more downside, potentially to last year’s low of $117, down by 34% from the current level.

Why Oracle shares have plunged 

Oracle, one of the biggest companies in the United States, has come under pressure in the past few months as investors question its large backlog and its elevated debt and negative cash flow.

As a result, the consensus price target for the stock has dropped from $322 three months ago to the current $303, representing a 70% upside from the current level.

The most recent results showed that Oracle’s business continued growing in the last quarter as it became a major supplier in the artificial intelligence industry. Its remaining performance obligations (RPO) jumped by 438% YoY to $523 billion, the highest one in the industry.

While this RPO is a big one, investors are concerned since most of it comes from OpenAI as part of the Stargate project. It is estimated that OpenAI accounts for about $300 billion of this order, a notable thing since it is still a highly unprofitable company. It is also entangled in similar deals worth over $1 trillion.

Oracle’s results showed that its revenue rose by 14% to $16.1 billion, while its earnings per share jumped by 91% to $2.1. Most of its growth came from its cloud infrastructure revenue, which rose by 68% to $4.1 billion, while the Fusion Cloud rose by 18%.

At the same time, the company’s debt continued rising, with the total debt rising by over $100 bilion. Therefore, investors are concerned about how the company will cover the upcoming maturities.

Data compiled by Yahoo Finance shows that the revenue will come in at $16.9 billion, up by 20% YoY, while its annual revenue will grow by 16% to $66 billion. This revenue will then jump to $86 billion in the next financial year. 

On the positive side, the ongoing Oracle stock crash has made it highly undervalued, with the forward price-to-earnings ratio moving to 2, lower than the sector median of 24. Therefore, the most likely scenario is where it continues falling in the near term and then rebounds later this year as investors buy the dip.

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