Palantir Stock Shows Healthy Consolidation As AI Interest Surges: The Bull, Bear Case

Palantir Technologies, Inc PLTR is showing continued consolidation Friday after a 134% rise between May 5 and June 7, which was caused by increased interest in the company's AI software.

The mostly sideways consolidation, which began on May 30, has allowed the eight-day exponential moving average (EMA) to catch up to the stock’s price, which is a good sign for the bulls. The eight-day EMA may continue to guide Palantir higher.

Palantir is trading in an uptrend, making a series of higher highs and higher lows. On Friday, the stock may have formed a lower high, which could negate the uptrend, but a downtrend won’t be confirmed unless a lower low forms.

The sideways consolidation has helped Palantir’s relative strength index (RSI) to fall lower. RSI is an indicator technical traders use to measure bullish and bearish price momentum. RSI levels can range between zero and 100, with levels between 30 and 70 generally considered to be healthy.

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The Palantir Chart: Palantir may continue to trade sideways for a longer period of time, which would help to drop the stock’s RSI down under the 70% level. Although Palantir’s RSI has fallen, it’s still measuring in at about 76%, which indicates the stock is overbought.

• If Palantir trades lower later on Friday or on Monday and drops under $14.39, Friday’s high-of-day will serve as a lower high and a downtrend will be confirmed with a lower low. Bullish traders want to see Palantir bounce up off the eight-day EMA, which would confirm the area as support and keep the uptrend intact.
• Bears want to see big bearish volume come in and break Palantir down from the eight-day EMA, which would confirm a new downtrend and could bring in higher-volume selling. If that happens, the stock may find support at the 21-day EMA.
• Palantir has resistance above at $16.29 and $17.84 and support below at $14.58 and $13.18.