Source: TradingView.com
Source: TradingView.com

Key Takeaways

  • Palantir shares jumped more than 6% Tuesday to a record high following bullish commentary from Ark Invest, which pointed out that the analytics software provider could have further potential upside from the AI boom.
  • After breaking out above an ascending triangle in early July, the stock has continued to trend higher apart from a brief early-August correction, with gains accelerating last month after the software vendor’s inclusion into the S&P 500 index.
  • During retracements, investors should watch important support levels on Palantir’s chart around $32.70, $29, and $25.50.
  • A bars pattern, which extracts Palantir’s trend higher from May to August last year and positions it from the early-August low, forecasts a potential bullish price target in the stock of around $55.

Palantir Technologies (PLTR) shares are likely to remain in the spotlight after jumping to a record high Tuesday following bullish commentary from Ark Invest, which said that the analytics software provider could have further potential upside from the artificial intelligence (AI) boom.

The technology-focused asset manager’s European managing director Rahul Bhushan told CNBC in an interview that data analytics software names such as Palantir sit well positioned to capture AI market share from tech giants as demand grows for customized data and AI services that tailor to clients’ specific needs.

Palantir shares rose 6.6% to $41.45 on Tuesday. The stock has gained 141% since the start of the year as of Tuesday’s close, jumping nearly 37% in the past month alone as it got a boost from its recent inclusion in the S&P 500 index.

Below, we take a closer look at the technicals on Palantir’s chart and point out important price levels that investors may be watching.

Uptrend Continues

Since breaking out above an ascending triangle in early July, Palantir shares have continued to trend higher apart from a brief early August correction, with gains accelerating last month after the software vendor’s entrance into the S&P 500.

Importantly, above-average trading volumes have accompanied the stock’s rally, indicating active buying from market-tracking funds.

However, the shares may see short-term profit-taking, given the relative strength index (RSI) flashes overbought conditions and has formed a bearish divergence with the price.

Let’s take a look at three important support levels on Palantir’s chart and use technical analysis to forecast a potential bullish price target.

Important Support Levels to Watch

During an initial pullback, investors should eye the $32.70 level, a location on the chart just below the rising 50-day moving average where the shares may attract support near the August swing high and the Sept. 9 breakaway gap’s opening price.

Selling below this level may see the shares fall to $29, where the price could encounter buying interest near a trendline joining the July peak and September trough.

A deeper retracement could lead to a retest of the $25.50 region, an area where investors may look for entry points around the ascending triangle’s top trendline, which appears to have flipped from resistance into support.

Bullish Price Target to Monitor

To forecast a potential bullish price target in the stock, we can use a bars pattern, a subjective chart technique that uses prior price action to predict future moves. 

In this case, we’ll extract Palantir’s trend higher from May to August last year and position that move from the early August selloff low, which forecasts a price target of around $55.

We selected this prior move as it started from the lower trendline of an earlier ascending triangle on the chart, similar to how the stock’s current uptrend began.

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