Despite recent gains, concerns persist about whether the price of Palantir (NYSE: PLTR) stock accurately reflects the company’s true value. Technical indicators suggest uncertainty in the market.
Currently, Palantir is experiencing a period of consolidation, with the stock trading at $42.97, representing a 2% increase for the day.
Analyzing PLTR’s weekly chart, market analyst SmartReversals suggests that a pullback may be imminent. One key indicator is the formation of a hanging man candle near the upper Bollinger Band, which often signals a reversal. This is reinforced by the stock’s overbought status, as indicated by the relative strength index (RSI) reaching 77.24, well above the critical threshold of 70.
Historically, when stocks reach this level, it typically indicates a weakening of bullish momentum and a potential entry point for sellers. Previous instances of reversal candles near the upper band have been followed by corrective moves, with support often found at the 20-week moving average (20MA), currently at $31.18. The stock has also found temporary support at the 10-week moving average.
Analyst Peter DiCarlo also highlights the stock’s technical setup, suggesting a possible sell-off and predicting a potential 10% pullback. DiCarlo notes that Palantir is likely to enter a compression zone and may test lower support levels.
Afortune Trading’s analysis supports the cautious outlook for PLTR’s share price. The stock has formed a descending triangle pattern after reaching a recent high of $45, indicating a potential pause or pullback in its upward momentum. Key support levels are identified at $40.94 and $38.05, with further support at $35.07 and $31.10. The RSI also suggests an overbought condition, hinting at a possible correction.
Analysts have mixed opinions on PLTR’s share price. While some, like Jake Ruth, believe the stock is overpriced and may not reflect its true value, others, such as Wedbush’s Daniel Ives and Bank of America’s Mariana Perez, remain optimistic about Palantir’s role in artificial intelligence (AI) and have set higher target prices.
Despite the mixed outlook, Palantir has had a successful year, fueled by optimism surrounding its AI capabilities. The company also has growth potential in the military and intelligence sectors, with opportunities to provide data analytics software in response to rising geopolitical tensions. Palantir has already secured lucrative deals with select government agencies.
