Palantir (PLTR) stock ‘no longer showing a healthy rise’; Is $23 crash next?

After an impressive run, the share price of American software giant Palantir (NYSE: PLTR) could be heading for rough waters as technical indicators suggest the recent momentum might be fading soon.

In this regard, despite the current price movement, which may have led retail investors to celebrate a bullish rise, the upward trend is not entirely healthy, as noted by a stock market analyst using the pseudonym Market Maestro in an X post on October 12.

The analysis is based on the potential PLTR’s cup and handle pattern. To this end, the equity has formed a ‘cup’ phase and may soon enter the ‘handle’ phase, with resistance levels of $45 and $47. Therefore, if the outlook is sustained, it could first attract retail investors and institutions, creating a ‘bull trap’ at these levels before a sudden decline.

The expert anticipates PLTR may dip to around $29 soon, with a longer-term potential for a sharp drop to $23. If Palantir holds above $29 after this dip, it could resume its uptrend, potentially reaching new highs. 

“The price movement is no longer showing a healthy rise. I’m maintaining my expectation for a handle formation. <…> I would break $45 upward, attract more retail and institutions, hand the shares over, and then, even without the intention, cause a scare with a single-day dip to $23,” he said. 

Additionally, the recent price surge may be due to a short squeeze, which is attracting retail investors. Market Maestro urged caution, warning that institutions could take profits before the dip and reclaim shares at lower prices. 

In this context, Finbold reported on October 11 that within a month, PLTR stock short interest had surged by 45%, coinciding with the period in which the equity has been making attempts to hit the $50 mark.

More warning of possible PLTR stock price crash 

Although Palantir investors anticipate the next record high of about $50, analysts warn that the current levels might be primed for a correction. In this case, analysis by an expert with the pseudonym Gnotz noted that as PLTR trades near its all-time highs, technical indicators suggest a possible pullback.

The expert stated that the stock has surged rapidly from its lows and is nearing resistance levels that could trigger a much-needed dip. Gnotz emphasized that the focus should be on overbought conditions, as indicated by the Relative Strength Index (RSI), which is approaching a critical threshold, signaling that profit-taking or a short-term correction may be on the horizon.

It’s worth noting that part of Palantir’s rally has been inspired by the company’s venture into the artificial intelligence (AI) scene. At the same time, Palantir’s sales have been bolstered by its role in helping the U.S. government with its counterterrorism efforts. 

To this end, the company has signed notable deals with government agencies, including a recent standout $100 million contract. Under this deal, Palantir will offer its AI targeting tools to U.S. military personnel, giving them access to its digital warfare platform.

However, there are concerns regarding the stock’s current price, with fears that it might not reflect the company’s actual valuation. In this regard, several high-profile analysts have turned bearish on the stock, most recommending ‘sell’ ratings. For instance, Jake Ruth called on traders to be cautious, warning that the current growth rate cannot last forever.

On the other hand, in late September, Raymond James analyst Brian Gesuale downgraded PLTR stock from “Outperform” to “Market Perform.” Although Gesuale remains optimistic about Palantir’s long-term positioning in the AI technology market, he shares concerns about the sharp rise in equity in recent months.

Of course, there are still some bullish voices, led by Wedbush analyst Daniel Ives. On September 26, he raised the firm’s price target to $45 from $38 while maintaining an outperform rating on the shares. He noted that this outlook is based on the possibility of more enterprises leveraging the company’s Artificial Intelligence Platform in 2025.

PLTR stock price analysis 

At the end of the last trading session, PLTR exhibited weakness, with the stock slightly dipping by less than 0.5% on the daily chart to trade at $43. Notably, the equity saw a high of $44 at one point. Meanwhile, in 2024, the stock has been rewarding investors, having rallied 162% year to date.

At its current valuation, PLTR is trading at $43, above its 50-day simple moving average (SMA) of $33.57 and 200-day SMA of $25.36, indicating a strong bullish trend. 

The 14-day RSI at 62.60 suggests growing momentum, though it is nearing overbought levels. While the uptrend is intact, caution is advised as the stock may face resistance or a pullback soon if the RSI continues to rise.