Palantir (PLTR) stock flashes ‘exhaustion signals’

While Palantir (NYSE: PLTR) stock has rallied recently, concerns persist about whether its price reflects the company’s true valuation and technical indicators might be backing this uncertainty. 

As things stand, Palantir is showing signs of consolidation. The equity is trading at $42.97, having gained over 2% for the day as of the latest session. 

Analysis of PLTR’s weekly chart shows signs of potential exhaustion, signaling that a pullback may be imminent, according to an outlook shared by a market analyst with the pseudonym SmartReversals in an X post on October 20. 

A key indicator is the formation of a hanging man candle near the upper Bollinger Band, often a sign of an impending reversal. This setup is reinforced by the overbought stock, as reflected in the relative strength index (RSI) reaching 77.24, significantly above the critical 70 threshold. 

Historically, when stocks approach this level, it typically indicates that bullish momentum is weakening, and sellers may soon step in.

Furthermore, previous instances of reversal candles like dojis or shooting stars near the upper band have been followed by corrective moves, with support often found at the 20-week moving average (20MA), which now sits at $31.18. The stock has found temporary support in milder pullbacks at the 10-week moving average.

More concerns about PLTR stock sell-off 

Analyst Peter DiCarlo also highlighted the stock’s technical setup, hinting at a possible sell-off. He warned that PLTR could face a potential 10% pullback. As reported by Finbold, DiCarlo noted that the software giant is likely to enter a compression zone, where it might test lower support zones. 

Another analysis by Afortune Trading also sustained the cautionary outlook for the PLTR share price. As per the analysis shared on October 18, following the recent high of $45, the equity has formed a descending triangle pattern, indicating a potential pause or pullback in its upward momentum.

To this end, key support levels are at $40.94 and $38.05, with further support at $35.07 and $31.10. The RSI is also overbought territory, suggesting a correction could be on the horizon. 

Meanwhile, analysts are sharing a mixed outlook on the PLTR share price. For instance, Jake Ruth warned that at over $40, Palantir’s stock is “very expensive” and may not reflect its actual value. This sentiment is based on the concern that Palantir might be growing too quickly and unable to sustain the momentum.

Mizuho’s Greg Moskowitz maintained a “sell” rating despite raising his valuation from $24 to $30, expecting strong earnings. 

However, some remain optimistic due to Palantir’s role in artificial intelligence (AI). Wedbush’s Daniel Ives raised his target to $45 with an “Outperform” rating, while Mariana Perez of Bank of America (NYSE: BAC) set a target of $50 with a “Buy” recommendation.

Palantir stock fundamentals

Amid the mixed outlook for the PLTR, the company has had an impressive year, building on the growing optimism around its role in the artificial intelligence space. 

At the same time, there remains growth potential, considering the American firm might benefit from rising geopolitical tensions, which could see Palantir offer its military and intelligence-focused data analytics software. To this end, the company has seen some lucrative deals with select government agencies.