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Palantir shares jumped Tuesday after the analytics software provider announced that its entire product suite has received approval for use in processing sensitive federal workloads, positioning the firm to provide an array of services to government entities.
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Since breaking out from a pennant last week, Palantir shares have continued to trend higher, with gains accelerating following Tuesday’s news.
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While the relative strength index confirms bullish price momentum above the 70 threshold, the indicator also flashes overbought conditions that could lead to short-term profit-taking.
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The measuring principle, which calculates the distance of the impulsive trend that preceded the pennant and adds that amount to the pattern’s upper trendline, forecasts an upside price target in the stock of $89.
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Investors should watch important support levels on Palantir’s chart around $58.50, $45, and $38.
Palantir (PLTR) shares are likely to remain in focus after jumping Tuesday following news that the analytics software provider’s entire product suite has received approval for use in processing sensitive federal workloads, positioning the firm to provide an array of services to government entities.
Sentiment for the stock may have also received a boost after Barron’s reported that the software maker remains a top contender to join the Nasdaq 100 when the tech-heavy index undergoes its annual reconstitution after the company transferred the listing of its Class A common stock to the Nasdaq from the New York Stock Exchange (NYSE) last month.
Palantir shares gained nearly 7% to close Tuesday at just under $71, after hitting a record high of $71.37 during the session. The stock has surged more than four-fold since the start of the year amid growing demand for the firm’s customizable artificial intelligence (AI) software solutions.
Below, we break down the technicals on Palantir’s chart and point out important price levels worth watching out for.
Since breaking out from a textbook pennant last week, Palantir shares have continued to trend higher, with gains accelerating following Tuesday’s news.
Importantly, the move occurred on the highest trading volume since mid-November, indicating buying conviction from larger market participants.
While the relative strength index (RSI) confirms bullish price momentum above the 70 threshold, the indicator also flashes overbought conditions that could lead to short-term profit-taking.
Let’s apply technical analysis to project how the stock’s current continuation move may play out and also identify three key support levels that investors will likely be watching.
To forecast a potential upside target, investors can use the measuring principle, a chart-based technique that analyzes prior price moves to project future projections.
When applying the tool to Palantir’s chart, we measure the distance of the impulsive trend that preceded the pennant in points and add that amount to the pattern’s upper trendline. For example, we add $25 to $64, which projects a price target of $89.
Upon an initial retracement, investors should watch the $58.50 level, a location about 18% below the stock’s current price where the shares may encounter support near the low of the pennant pattern.
A close below this level could lead to a reversal down to around $45. Investors may look for buying opportunities in this area near two prior peaks that formed on the chart during October before the stock’s early-November breakaway gap higher.
Finally, a deeper correction may see Palantir shares fall to lower support at the $38 level. This region could attract buying interest near the top trendline of a consolidation period that formed on the chart between late September and early October.
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