Palantir Technologies Inc (NYSE: PLTR) gapped down 2% Thursday morning but bulls bought the dip and the stock quickly filled the overhead gap.

Palantir has high retail interest and often trends on both Twitter and in various Reddit communities. Due to this, it can be viewed as a crowded trade. When a trade is crowded it means there are a lot of participants actively buying and selling the stock, which can result in increased volatility and large moves in either direction.

When Palantir reached an all-time high of $45 on Jan. 27, it began a steep months-long downtrend that bottomed on May 11 at $17.06. Short interest in the stock, which helped to bring Palantir down, has been decreasing over time as the short traders have covered their positions. The number of Palantir’s 1.46 billion float held short has decreased from 85.27 million shares in May to 52.3 million in June.

The Palantir Chart: On Thursday morning, Palantir banged into a resistance level at $23.27. Although Palantir’s stock has lost about 16% of its value over the last seven trading days it's still trading up over 33% from its low near $17 and was in need of consolidation.

Palantir is trading below the eight-day and 21-day exponential moving averages (EMAs) and on Thursday the eight-day EMA crossed below the 21-day EMA, both of which are bearish indicators for the short term. Palantir is also trading below the 200-day simple moving average which indicates overall sentiment in the stock is bearish.

On Thursday, Palantir was printing a morning star candlestick pattern indicating a reversal north may be in the cards. A morning start candlestick has both a top and bottom wick and happens at the bottom of a downtrend. Friday’s candle, demonstrating higher prices, will be needed to confirm the pattern, however.

Palantir has a gap above between the $30 and $31 level and because gaps fill 90% of the time, it's likely the stock will trade back up into the range at some point in the future.

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Bulls want to see the morning start pattern confirmed and for bullish momentum to pop Palantir up over its upper resistance level. If it can recapture the level as support, it has room to move up to $25.58, which would also allow Palantir to recapture the moving averages as further support.

Bears want to see Palantir continue to reject from its upper resistance and for selling pressure to come in and drop Palantir down to its next support at the $21 level. If it were unable to hold that level as support it could fall back toward the low of $17.