Why Palantir Could Retrace Here

As a long-time $Palantir Technologies Inc.(PLTR)$ bull, I’ve been accumulating shares throughout the year, taking advantage of its growth and future potential. However, after the recent explosive breakout from an ascending channel, I believe a retracement could be on the horizon.

Tiger Broker App

Don’t get me wrong—I’m still bullish on PLTR for the long term, but from a technical perspective, the current price action suggests a short-term pullback is increasingly likely. Here’s why I think now might be the time to prepare for a potential retracement.

PLTR Weekly Chart

Palantir recently experienced a strong breakout, one that shot the price up after following an ascending channel pattern. This kind of movement is incredibly bullish, signaling that momentum is on the side of buyers, and it speaks to the growing confidence in PLTR’s long-term potential.

However, as with any breakout, it’s unlikely that this surge will last forever. Breakouts often lead to short-term overbought conditions, where the stock price becomes extended, and a retracement or pullback is natural before the next leg up. In fact, this is a healthy part of any upward trend, as it allows the market to cool off, consolidate gains, and create a more sustainable path forward.

PLTR Daily Chart

The candlestick patterns from the past two trading days have caught my attention. On the chart, I see a green Doji followed by an inverted red hammer. This is a common combination that can suggest a pause or reversal in an uptrend. The Green Doji is a Doji candlestick represents indecision or a lack of clear direction. It occurs when a stock’s open and close prices are nearly identical, signaling that neither buyers nor sellers had control that day. After a bullish run, this can be a sign that the momentum is stalling.

The inverted hammer is typically a bearish reversal signal, especially when it comes after a strong uptrend. It has a long upper shadow and a small body, which shows that buyers tried to push the price higher during the session, but sellers came in and forced it back down. This failed attempt to move higher often signals that the buying pressure is weakening.

The combination of these two patterns—a green Doji followed by an inverted red hammer—suggests that PLTR’s uptrend may be stalling. While this doesn’t guarantee a reversal, it’s a strong enough signal to make me cautious about the stock’s near-term direction.

Aside from the technical patterns, I’m also keeping an eye on the broader market sentiment. Recently, we’ve seen increased volatility in the tech sector, and this will affect high-growth stocks like Palantir. While PLTR’s business prospects remain strong, it’s important to remember that external factors can impact its price action. A broader market pullback could easily trigger a retracement in Palantir, even if the company’s fundamentals remain solid.

My Strategy

So, what’s my plan? While I’m not looking to sell my Palantir shares outright, I’m considering selling covered calls to take advantage of this potential retracement. Covered calls allow me to collect a premium while holding onto my shares, providing some downside protection if the stock pulls back or stays in a range.

Why Covered Calls?

I’m already sitting on a nice profit from my earlier positions, so by selling covered calls, I can generate additional income while still holding my shares. If PLTR retraces, I’ll keep the premium from the options and potentially close the trade for a profit.

Risk Management

I’ll be watching the stock closely. If PLTR breaks significantly above its all-time high (around $45), I’ll consider setting a stop-loss on my covered calls to avoid capping my upside. However, if the stock retraces or remains range-bound, I’ll happily collect the premium and adjust my position accordingly.

This is my personal approach, and it reflects my read on the current market conditions. Options trading carries risks, and it’s important to evaluate your own risk tolerance before implementing any strategy.

In summary, while I remain bullish on Palantir’s long-term potential, I believe a short-term retracement is likely. The recent candlestick patterns—especially the green Doji and inverted red hammer—suggest a possible pause or reversal in the stock’s uptrend. Coupled with broader market uncertainties, I think we could see the stock pull back or consolidate in the near term.

That said, this is a normal and healthy part of any upward trend, and I’ll be using it as an opportunity to adjust my strategy and potentially generate additional income through covered calls. I’m not selling my shares yet, but I’m prepared for a temporary pause in PLTR’s momentum.

What are your thoughts on Palantir’s recent breakout?

Do you see a retracement coming, or do you think the stock will continue climbing?

@MillionaireTiger @Tiger_comments @Daily_Discussion @CaptainTiger @Tigersg

Disclaimer: This is a general analysis and not financial advice. Always conduct your own research before making any investment decisions.