Palantir Technologies Stock News and Forecast: PLTR falls for third day, hits critical support

Update July 1: Palantir Technologies Inc (NYSE: PLTR) has been extending its drops, trading at around $25.42 at the time of writing on Thursday. While shares of the somewhat secretive technology company are still up by some 10% on the month, these gains are at risk as current levels mark a critical support line. At around this price, PLTR hit a plateau in mid-June. Will it bounce from here? Broader markets await Friday's all-important Nonfarm Payrolls figures for June, but Palantir-specific developments could alter the equity as well. 

Palantir shares have struggled for the last two sessions as they ran into headwinds and resistance at $27.49. This was the Mach high and an area of some pretty decent volume, so bulls should not get too disheartened. The strong bullish trend is still in place, but it is looking a little more questionable. Wednesday saw the stock close just over 1% lower at $26.36. PLTR stock gave up some gains on Tuesday also, retracing just under 3%. 

Earlier in the rally, we outlined three reasons why the trend should continue.

1.PLTR shares continues to trade in a strong uptrend with solid fundamentals as it wins new customers.

2. The Moving Average Convergence Divergence (MACD) indicator looks to break the downtrend and add impetus to the bullish trend.

3. Markets love to fill gaps and from $30-32 is a gap that PLTR left from earnings in February. The 9-day Simple Moving Average (SMA) is guiding the shares higher.

From the above, the trend did continue but has now run into resistance and retraced. There trend then is now more questionable.

The MACD has not yet broken the downtrend and that is partly why the rally has run out of steam, combined with the strong resistance at $27.49. 

The gap is still there and waiting to be filled, so is this a dip-buying opportunity?

The customer winds keep on coming for Palantir. The Centre for Disease Control (CDC) recently announced it has renewed its partnership with Palantir in relation to disease monitoring and outbreak control. This adds to another recent win with the US Federal Aviation Authority (FAA) selecting Palantir. Last Thursday saw the announcement of an agreement with DataRobot designed to create unique, agile and real-time solutions to help solve the most pressing demand forecasting problems. 

Palantir (PLTR) statistics

Palantir stock forecast

The volume profile on the right of the chart shows just how much volume thins out as PLTR shares get above $28. Above $30, the volume shrinks to almost nothing as this corresponds with the gap on the price chart. This gap was caused by earnings on February 16. Markets love to fill gaps, and this is what we have been aiming for PLTR stock to fill. But the rally has run out of steam and retraced to the 9-day moving average. This needs to hold to keep momentum in the stock but all is not lost for bulls until the combination of the point of control and the 21-day moving average break. This level is set around $24.70 at the moment. The Relative Strength Index (RSI) had moved into the overbought zone again showing the move was becoming stretched and that is duly what happened. 

To resume the rally we would like to see the MACD break the downtrend in place since December 2020 and see $27.49 break. If both these play out, the stock should move to fill the gap mentioned between $30 and $32. As previously mentioned, buying a $30 call option could still be an interesting strategy should the price accelerate through $27.49 and aim for the gap from $30 to $32. Call options also offer built-in risk management as you can only lose the premium. If PLTR stock price accelerates through $30, then the call option becomes in the money, increasing its value. The increasing speed of the price move also increases volatility, which also increases the value of an option.

Previous updates

Update: PLTR shares have continued to fall having earlier touched our resistance target at $27.49. The shares lost 1% on Wednesday and ahve slid 4% straight off teh bat in the first half hour of THursdays trading. Given the strong gains not too unexpected and perhaps offering a buy the dip opportunity.