Palantir stock forms bullish pattern targeting $80, but a pullback is brewing

After Palantir’s (NYSE: PLTR) stock hit a record high, technical indicators suggest the equity has more upside potential, but concerns are rising over the sustainability of this momentum.

Currently, PLTR is trading at $44.86 after briefly reaching an all-time high of $45, while the market capitalization topped $100 billion for the first time. 

The company’s venture into artificial intelligence (AI) has contributed to Palantir’s rally, with the stock up 170% year-to-date.

The stock’s monthly chart displays a bullish “cup and handle” pattern, suggesting that PLTR might target another high near the $80 level to solidify its 2024 rally, according to stock trading expert SmartReversals in an X post on October 27.

The analyst noted that the “cup” represents a period of accumulation as Palantir’s price steadily recovered from lows in 2022, reaching its current $44.86. The breakout point, around $45.07, marks the upper resistance level.

If the handle forms and Palantir breaks above this resistance, it could initiate a bullish push toward the $80 target. However, the analyst cautioned that the handle does not always form.

On the other hand, momentum indicators such as the Money Flow Index (MFI) and Relative Strength Index (RSI) reveal overbought conditions at 83.18 and 77.23, respectively. These elevated levels suggest the stock might face a short-term correction.

PLTR’s stock bullish case 

Amid the potential for a sell-off, PLTR’s possible push past $45 will likely stem from the company’s upcoming Q3 2024 earnings report, scheduled for November 4. 

Expectations are high that the firm’s AI products for government and commercial clients will build on the $678.13 million revenue recorded in Q2 2024, a 27% year-over-year growth. Currently, the company’s full-year revenue guidance stands at $2.746 billion.

Analysts like Dan Ives from Wedbush, who likens Palantir’s AI capabilities to Argentinian soccer star Lionel Messi, support the optimistic outlook. Ives anticipates more demand for Palantir’s Artificial Intelligence Platform in 2025, citing possible enterprise demand.

However, other dissenting voices warn that Palantir stock does not match the company’s valuation. Some market players believe that PLTR is pricing in anticipation of future growth, and the stock may falter if the company fails to meet these projected targets.

What next for PLTR stock 

With the valuation debate around PLTR ongoing, stock market analyst Sammy McCallum noted that this should not be a concern, as the company shows potential to reach a market cap of $150 billion.

“Palantir breaking out probably sees it motor towards a $150B Market Cap in short order.Stop complaining about valuations. It’s an exponential growth company and Wall St is only just waking up to it,” he said. 

In an X post on October 27, McCallum stated that PLTR has more potential for a breakout and cited the formation of a multi-year “cup and handle” pattern.

This formation culminated in a breakout after the stock cleared the $30–$35 resistance range. Fibonacci extension levels provide further targets, with the next major resistance indicated near the 61.8% Fibonacci level, around $69.20.

Finally, if PLTR still has room for further growth, the stock must turn $45 into a support zone before targeting $50.