PLTR breakout shows momentum but rising wedge and RSI divergence indicate potential further decline before a major rise.

Well, it seems that Goldman Sachs sees an opportunity here for Palantir. It has performed poorly , especially when compared to the Standard & Poor's 500. Over the past five days, Tron Palantir has formed a fairly orderly and concise ascending triangle .

In fact, with this news, we are seeing a breakout of the low- volume resistance level at approximately 19.5. This was done with remarkable force.

The ADX indicator in the lower panel is used as a measure of trend strength. We can see that it has moved from around level 25 , which is a threshold for a strong trend, to nearly 60.

This indicates that there is momentum behind it.

Now, that doesn't mean it will continue. Just because this upward trend exists in the short timeframe, and it has broken through the resistance level, you should remember that things are not always that simple.

We have seen Palantir trending downwards for a period up to the June-July timeframe. Earnings announcements have changed course slightly. In fact, with the announcement of the August earnings, we saw a large gap upwards, followed by an upward move .

But the shape of that ascent is perhaps what matters in this perspective.

Here we get what is sometimes referred to as a rising wedge, where support and resistance rise together but converge. This is often stressful for traders in an upward trend, and we may see the price break out of the bottom of that wedge and start moving downwards .

Therefore, the crucial challenge becomes the 195 level, and whether the price is able to hold at this level and continue to rise. You have some resistance around the 200 mark.

What worries me, perhaps from a technical perspective, Diane, is the Relative Strength Index (RSI); Since the announcement of the August earnings, the index has been trending downwards while the price has been trending upwards. This is a very strong downward divergence.

This does not mean that we will see a reversal, but if it is coupled with the rising wedge, it may mean that we are not completely finished with the decline, and we may see another round of decline before we see a big rise in Palantir shares, Diane.