The Key Takeaways
- Palantir’s stock soared Tuesday following the announcement that the entire suite of its analytics software has been approved to be used in the processing of sensitive federal workloads. The firm is now positioned to provide a variety services to government agencies.
- Since breaking out from a pennant last week, Palantir shares have continued to trend higher, with gains accelerating following Tuesday's news.
- The relative strength indicator confirms that the price is moving upwards above the threshold of 70, but it also signals overbought situations which could result in short-term profits.
- This principle forecasts a price increase of $89 for the stock based on the upper trendline of the pennant pattern.
- Investors should watch important support levels on Palantir's chart around $58.50, $45, and $38.
Shares of Palantir, the software analytics provider (PLTR), are expected to stay in focus following the news on Tuesday that its entire product suite had been given approval to be used in handling sensitive federal workloads.
Stock sentiment could have also been boosted by Barron’s report that said the software manufacturer remains a strong contender to be included in the Nasdaq 100 during the annual re-constitution of this tech-heavy index. Last month, the company moved its Class A Common Stock from the New York Stock Exchange(NYSE) to the Nasdaq.
Palantir’s shares rose nearly 7% on Tuesday to just below $71, having reached a session high of $71.37. Since the beginning of this year, the stock price has increased by more than 4 times due to growing demand from clients for Palantir’s customized artificial intelligence software.
Here we will break down Palantir’s chart in terms of technicals, and also point out key price levels that are worth monitoring.
Continuation Move
Palantir has continued its upward trend since breaking from the textbook pennant pattern last week. Gains have increased following Tuesday’s good news.
The move was made on the largest trading volume seen since November, which indicates that the larger participants in the market are buying with confidence.
The relative strength indicator (RSI), while confirming bullish momentum in the price above the threshold of 70, also signals overbought situations that may lead to a short-term loss.
Applying technical analysis, let’s project the future direction of this stock and determine three critical support levels. Investors will be closely watching these.
The Monitor Price Upside Down
Investors can forecast an upside potential target by using the measuring principle. This is a charting-based method that analyses previous price movements to make future projections.
In order to apply the tool on Palantir’s graph, you measure the distance between the pennant’s impulsive pattern and the upper trendline in points. As an example, add $25 on top of $64, which gives us $89.
The Key Support Levels To Watch
Investors can watch for support around the lowest point of the pennant formation if the initial price retracement occurs. The $58.50 area is approximately 18% beneath the stock’s present value.
If this level is broken, it could cause a downward reversal to about $45. Investors can look to buy in the area around two previous peaks on the chart that were formed during October, before the stock broke away higher early November.
Palantir’s shares may fall further to the lower support level of $38 in a more severe correction. Near the top trendline, a period of consolidation that was formed in the chart from late September through early October may attract buyers.
Informational only. Read our warranty and liability disclaimer for more info.
The author of this article does not currently own any securities listed above.
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