Palantir (PLTR) Potential Reversal In Sight (Bullish)

As we have seen $Palantir Technologies Inc.(PLTR)$ trading in quite a volatile state in recent weeks, With investors feeling positive towards the tech stocks earnings, we could expect some help from that on Palantir.

In this article I decided to do a technical analysis and try to see if we can find any trend of reversal and what are the factors that could contribute to either a good (bullish) reversal or poor (bearish) reversal.

Palantir Saw A Falling Wedge Trend

Looking at how Palantir have been trading since March 2024, we could see a falling wedge forming. Together with weak bulls (buying) strength.

But if we look at how falling wedge pattern is characterized by a contracting range between two converging trendlines slanting downward. This pattern typically forms during a downtrend and is considered a potential reversal signal.

If we look at the chart below, it is actually forms when the price makes lower lows and lower highs, but at a decreasing rate. The support line (lower trendline) connects the successive lows, while the resistance line (upper trendline) connects the decreasing highs.

Decreasing Volatility

If we look closely at the price, it oscillates within the falling wedge, the trading range contracts. This decreasing volatility is a sign that the bears (sellers) are losing momentum, while the bulls (buyers) are gaining strength.

As seen in the above chart, the selling strength is decreasing, so there might be potential when we see buying strength forming back.

When Do We See A Potential Reversal Signal?

The falling wedge pattern suggests that while sellers are still present, their control over the market is weakening. Conversely, buyers are becoming more active, causing the price range to narrow. This dynamic often precedes a reversal in the prevailing downtrend.

Look For Breakout Confirmation

The confirmation of a potential reversal occurs when the price breaks above the upper trendline of the falling wedge pattern. This breakout signals that bullish momentum has likely taken over, potentially leading to a reversal or at least a significant upward move. Volume analysis can further support the validity of the breakout. Ideally, a breakout accompanied by an increase in trading volume enhances the reliability of the pattern.

Basically I use the KDJ to determine the Buy and Sell and also to find the breakout, we might not be able to catch the correct target price, but we can always use the height of the wedge as a target for the potential upward move after the breakout. This is measured by subtracting the lowest low from the highest high within the pattern and adding that value to the breakout point.

Summary

I have used a falling wedges with some other indicators to determine and confirm reversal patterns, this might not be the best combination, but it is essential to consider other technical indicators, market context, and fundamental factors before making trading decisions.

Additionally, false breakouts can occur, so we often wait for confirmation before entering a trade based on this pattern.

Appreciate if you could share your thoughts in the comment section whether you think Palantir is going to see a bullish reversal coming?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.