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Palantir AI success sparks investor frenzy: Technical analysis points to higher high

Palantir AI success sparks investor frenzy: Technical analysis points to higher high
Kliment Dukovski

Palantir Technologies (NYSE: PLTR) shares soared on Friday, July 28, as Wedbush technology analyst Dan Ives gave it an Outperform rating with a target price of $25.

Adding to the Outperform rating, Ives said Palantir has a “golden path to monetize a trillion dollar market opportunity.” He added that Palantir “is still undiscovered as a broader AI play” and “as they execute, more investors will start to look at it.”

The $25 price target is based on 10 times his bull case 2027 revenue estimate of $5 billion.

The company is expected to report its quarterly earnings results in early August, which should provide a better understanding of whether the current share price is justified.

Whatever happens, though, the price charts show a strong potential for more gains within the next 12 months.

Palantir stock price nearing major resistance level

PLTR had a spectacular run, returning 172% year to date compared to S&P 500’s 19% return.

However, the share price is inching closer to a strong resistance level that may hold back further advances in the short term.

PLTR daily stock price chart. Source: StockCharts.com

The daily chart shows an ascending channel, which is typically a bearish pattern. On top of that, the MACD is diverging, making lower lows as the price makes higher highs. These patterns form as the price nears $20 — a major resistance level.

Resistance levels are price zones where more traders await to sell the stock than there are buyers for it. This often happens after the stock price has already extended beyond “reasonable” levels.

This points to a potential pullback after the $20 level is hit or before it hits. The previous price level of $15 is the support for now. If we see this price, it could be a good spot for buyers to accumulate before another move higher.

PLTR daily stock price chart. Source: StockCharts.com

The weekly chart shows a rounding bottom pattern. This is a bullish reversal pattern that appears in a downtrend. It’s also best suited for the weekly chart as it’s a long-term pattern.

The breakout above $10 already confirmed the bullishness of the rounding bottom pattern. However, $20 remains as a resistance level. A break above this price will likely propel PLTR toward $30 sometime in 2024, depending on how the AI stocks frenzy plays out.

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