Spotify Stock Drops 3.53% As Bearish Momentum Rejects $720 Resistance

Spotify Technology (SPOT) declined 3.53% in the most recent session, closing at $695.48 after trading between $685.47 and $719, driven by significant volume of over 2.14 million shares. This marks a decisive rejection of the $720 resistance level observed in prior days.
Candlestick Theory
Recent price action reveals critical patterns. The July 17th session formed a bullish candle closing near highs ($720.91), but this was swiftly negated by a July 18th bearish engulfing candle, closing near session lows ($695.48) on elevated volume. This pattern suggests strong selling pressure rejecting the $720–$725 zone as resistance. Key support emerges near $665–$670, aligning with consolidation from early June and the May swing high. Failure to hold this level may trigger further downside toward $620–$630.
Moving Average Theory
The 50-day moving average (MA) has crossed below the 100-day MA, confirming a bearish near-term momentum shift. Current price ($695.48) sits below the 50-day MA (~$710) and 100-day MA (~$705), reinforcing resistance. The 200-day MA (~$570) remains supportive longer-term but is distant. The cascading MAs (200 > 100 > 50 > price) signal entrenched bearish momentum, requiring a close above $725 to invalidate.
MACD & KDJ Indicators
The MACD histogram shows accelerating negative momentum, with the signal line firmly below zero. KDJ metrics are oversold (K-line: 18, D-line: 25), suggesting potential for a short-term technical bounce. However, the lack of bullish divergence implies any rebound could be corrective rather than trend-reversing. Confluence with other indicators would be needed to confirm strength.
Bollinger Bands
Bands contracted sharply in early July, preceding the recent breakdown. Price has pierced the lower Bollinger Band ($687–$700 range), signaling oversold conditions. However, the expansion in band width and close below the lower band on high volume indicates sustained bearish momentum. A move back inside the bands is necessary to stabilize the price structure.
Volume-Price Relationship
Distribution patterns dominate. The July 1st plunge (-5.86%) occurred on the year’s highest volume (2.72M shares), confirming institutional selling. Recent down days (July 10, 18) show volume spikes, while recovery attempts (July 11, 14) display muted volume—classic bearish divergence. This undermines sustainability of rallies and reinforces supply dominance near $720.
Relative Strength Index (RSI)
The 14-day RSI reads 37.85, in neutral territory but declining. While not oversold (<30), its downward trajectory from mid-June (over 60) aligns with weakening momentum. The RSI’s failure to breach 50 during July rebound attempts further validates bearish control. A dip below 30 would signal oversold conditions but warrants caution given the prevailing downtrend.
Fibonacci Retracement
Applying Fibonacci to the upswing from the March low (~$325) to the June high ($785) reveals key levels. The 38.2% retracement ($625) aligns with the April consolidation, offering major support. The current price hovers near the 23.6% level ($665), a breach of which opens the path to $625 (38.2%). Resistance now converges at the 50-day MA and the $720–$725 zone (near the 10% retracement).
Confluence & Divergence
Confluence is evident in resistance near $720–$725 (price structure, MAs, volume profile) and support at $665 (Fibonacci, prior swing high). Bearish divergences stand out: RSI and volume dynamics failed to confirm July recovery attempts, while MACD momentum persistently deteriorated. The oversold KDJ reading lacks corroboration from other oscillators or volume, reducing its reliability as a reversal signal.
Probabilistic Outlook
Technicals collectively favor downside continuation. Resistance at $720–$725 is fortified by moving averages, volume distribution, and candlestick rejection. While oversold KDJ hints at a near-term bounce, the lack of bullish confluence and dominant volume-price divergence suggest rallies may be short-lived. A sustained break below $665 support could accelerate declines toward $625–$630. Traders should monitor for bullish reversal patterns with volume confirmation near key supports to signal potential trend shift. Until then, the path of least resistance appears downward.