• David Yocum

Bearish Setup Case Study - $PLTR

$PLTR Daily - 2022

Palantir is a growth company that had many running on high hopes going into 2022. Not us. Why? Palantir started this year in a downtrend and continues its carnage at the time of this post (summer 2022).

Starting on the left of the chart, we saw a textbook bear pennant form into our key 21 and 34 EMAs. Price ended up gapping down on a poor earnings reaction. I do not play earnings unless my position is already up big and I have begun to scale out with profits. This especially applies to short positions as any news could come during a company's earnings call.

Price looked to attempt a bullish reversal but ended up being rejected off the previous pennant's high. An entry off that rejection offered the highest risk/reward ratio throughout this chart. After this rejection of a new bull trend, price tested its downtrend and broke through. This was a sign we are likely to test those previous lows from earlier in the year.

Image via learnpriceaction.org

In early May, Palantir had yet another poor earnings reaction rewarding those who held short. This

earnings reaction was followed by a rally to a key

monthly pivot. Price formed a shooting star candlestick (see illustration) off this level and the 34EMA. I took a short position on this day with a stop above that shooting stars high. Given market conditions during this period, I quickly began to scale out seeing profit and moved my stop down accordingly.


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