Watch these Palantir price levels as stock jumps on S&P 500 inclusion

Key Takeaways

Palantir Technologies ( PLTR ) (shares jumped in premarket trading Monday after S&P Global announced late Friday that the big data analytics software company will join the benchmark S&P 500 index , with the inclusions taking effect before the market opens on Sept. 23.

The Denver-based company’s stock, which has nearly doubled over the past twelve months through Friday’s close, has been on investors’ radar as a possible contender to gain a coveted inclusion in the blue-chip index this year as its artificial intelligence (AI) software offerings continue to drive profits.

To join the S&P 500, a company must have reported a profit in its latest quarter and have cumulative profit over the four most recent quarters, requirements the software maker easily satisfies after reporting a profit in the past seven consecutive quarters, with its latest quarterly profit representing the largest in its twenty-year history.

Palantir shares were up 7.8% at $32.69 about 90 minutes before Monday's opening bell.

Below, we’ll take a closer look at what the technicals on Palantir's chart are saying and point out important price levels that investors should to watch out for.

August Bear Trap

Palantir shares broke out from an ascending triangle in early July before temporarily falling below the patten during the early August broad market selloff.

However, the stock promptly reclaimed the triangle’s top trendline, climbing to a new multi-year high in the process. The move formed a bear trap , a chart pattern that lures investors into selling or entering short positions before the market makes a prompt recovery.

Looking ahead, investors should monitor several key price levels on Palantir’s chart that will likely gain attention.

Key Overhead Price Levels to Watch

The first sits around $32.70, roughly in line with Monday’s projected opening price. This area on the chart could provide resistance near a range of similar trading levels positioned around last month’s high.

A close above this level could see the shares make a move up to the $34.75 region. We project this target using the measuring principle technique, which calculates the distance between the ascending triangle’s two trendlines in points and adds that amount to the pattern’s top trendline. ($9.25 + $25.50 = $34.75).

Retracement Levels to Watch

A pullback in the stock would likely encounter initial support near $29, a location on the chart where the price finds a confluence of support from a horizontal line linking a range of consolidation around the July high with the upward sloping 50-day moving average (MA) .

Further share price weakness could lead to a retest of the key $25.50 level, where investors would likely seek entry points near the ascending triangle’s top trendline. Such a move would represent a 16% decline from Friday’s closing price.

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