Palantir Climbs Higher Following $250M Government Contract: The Bull, Bear Case

Palantir Technologies, Inc PLTR continued its ascent higher on Thursday after being boosted on Wednesday by news the company was awarded a $250 million contract from the U.S. Department of Defense.

Wednesday’s move higher confirmed a new uptrend was in the cards for Palantir because the stock printed a higher high after forming a higher low on Monday.

An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.

The higher highs indicate the bulls are in control, while the intermittent higher lows indicate consolidation periods.

Traders can use moving averages to help identify an uptrend, with rising lower time frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend.

Rising longer-term moving averages (such as the 200-day simple moving average) indicate a long-term uptrend.

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The Palantir Chart: Palantir formed a bullish double bottom pattern on Aug. 18 and Sept. 21 and on Wednesday, the stock reacted to the pattern, rising almost 7% and printing a bullish kicker candlestick, which suggested higher prices would come on Thursday. On Thursday, Palantir opened above the eight-day exponential moving average (EMA) and rose from the area to test resistance at the 50-day simple moving average.

• Because Palantir has formed both a lower high and a higher high, the stock is trading in a confirmed uptrend. Eventually, Palantir will retrace to at least print another higher low, which could provide a solid entry for bullish traders who aren’t already in a position.
• Bullish traders want to see Palantir regain the 50-day SMA as support, which will cause the eight-day EMA to cross above the 21-day EMA. Bears want to see the stock continue to reject that level and then for big bearish volume to come in and break Palantir down to form a lower low.
• Palantir has resistance above at $16.29 and at $17.84 and support below at $14.58 and at $13.68.

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