Palantir Technologies, Inc (NYSE: NYSE:PLTR) was trading slightly lower on Wednesday afternoon after a volume pop in the morning took the stock temporarily up over Tuesday’s high-of-day.
On Tuesday, Palantir broke up from a bull flag pattern on the daily chart, and continuation higher within the new uptrend is the most likely scenario.
The bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines.
- For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downward within the following channel for a short period of time. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
- Bullish traders will want to watch for a break up from the upper descending trendline of the flag formation, on high volume, for an entry. When a stock breaks up from a bull flag pattern, the measured move higher is equal to the length of the pole and should be added to the lowest price within the flag.
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The Palantir Chart: Palantir formed into a bull flag pattern after reversing into an uptrend on March 14 and the $10.27 level, with the pole created between that date and March 22 and the flag formed between March 23 and Monday. The measured move of the break from the flag is about 31%, which indicates Palantir could trade up over the $16 level in the future.
- The bull flag also caused Palantir to print a higher low on March 24 at the $12.71 level, which confirmed the stock is now trading in an uptrend. The low-of-day that Palantir printed on Wednesday may be the next higher low and if so, bullish traders may choose to take a position in anticipation of a move higher on Thursday with a stop placed just above the previous higher low.
- Palantir is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is also trading above the 50-day simple moving average, which indicates longer-term sentiment is bullish.
- Palantir has resistance above at $14.58 and $16.29 and support below at $13.18 and $10.99.
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