Palo Alto Networks (PANW) Price Forecast: Is a Deeper Correction Taking Shape?

Rally Shows Signs of Exhaustion

After a powerful 164% advance in the stock of Palo Alto Networks, Inc. (PANW), a leading cybersecurity firm, the risk of a pullback is increasing. This is despite Bank of America recently raising price objectives for the sector and gains in the wider software sector during Monday’s session. PANW signaled a continuation of its decline after falling below the 20-day moving average last week. Subsequently, three daily closes below that key trend indicator confirmed the breakdown and its bearish implications.

Double Top Puts the Trend to the Test

PANW reached a second recent daily swing high of $368.80 two weeks ago, before falling in a steady decline that has continued. This sets up a potential double-top reversal pattern within a four-week range, with a potential trigger below the neckline at the recent swing low of $314.95. Given the weakening of the bullish trend after testing a key upside target zone for the second time, the bearish correction may be about to deepen, putting lower targets in sight.

Momentum Weakens After a 164% Surge

The potential for a deeper pullback is reinforced by the fact that PANW completed an approximate 164% rally in about four months, rising from the prior swing low of $139.57 in February to the recent high of $368.80. The weekly Relative Strength Index (RSI) momentum oscillator has turned down from overbought conditions, while a bearish divergence in the daily RSI has been evident since the first top at $368.17 in early July.

Moreover, the stock reached a key upside target at $359.59 during the advance, which was the 261.8% extension of the bearish correction that followed the October 2025 swing high. The combination of an extended advance, weakening momentum, and a failure to extend beyond the higher target leaves the stock increasingly vulnerable to a deeper correction.

Downside Targets Begin to Emerge

The 50-day moving average near $299 presents an initial downside target zone, along with the prior high of $302.95. Since the 50-day average has not been notably tested as support since it was reclaimed in April, it will be a key decision zone. The 38.2% Fibonacci retracement of the prior advance is at $282.74, and the 50% retracement is at $256.15, near a higher swing low of $251.15. Nearby is an estimated target derived from measuring the double-top formation at $261.10, adding to the significance of that price zone.

Nevertheless, if a more significant bearish correction unfolds, the 61.8% Fibonacci retracement at $229.56, along with the prior high of $223.61, could become a potential lower target. For now, the break below the 20-day moving average and developing double-top point to increasing downside risk, while a break below $314.95 would confirm a deeper correction.

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