Spotify Rebounds 4.91% After 11.55% Plunge As 620 Support Holds

Spotify Technology (SPOT) gained 4.91% in the most recent session, closing at 650.47 on a volume of 5,862,844 shares. This move followed a significant -11.55% drop the prior session, creating a volatile backdrop for technical analysis encompassing the past year.
Candlestick Theory
Spotify's price action reveals distinct patterns and key levels. The sharp decline on July 29th (close 620.01) formed a clear support zone near 620. The subsequent session (July 30th) created a robust bullish candle closing near the session high (650.47), decisively breaking above the opening gap down created on the 29th and forming a potential bullish reversal pattern (like an Engulfing or Piercing Line) after testing the 620 support. Previous highs around 710 in late July act as significant near-term resistance, while the June/July lows near 600-610 represent crucial longer-term support.
Moving Average Theory
Spotify's moving averages depict a challenging trend structure. The long-term 200-day MA (approximately 530 based on the full data sample) remains well below the current price, suggesting a primary uptrend exists. However, the medium-term outlook is bearish; the 100-day MA (estimated ~625) has served as resistance recently, and the 50-day MA (estimated ~660) is currently below it, forming a Death Cross pattern around mid-July. This signals weakening medium-term momentum. The price is attempting to reclaim the 100-day MA following the bounce from 620.
MACD & KDJ Indicators
The MACD (12,26,9) likely resides below its signal line, reflecting the recent downtrend persistence, but may be showing signs of potential convergence or flattening near oversold levels following the sharp drop and rebound. The KDJ Oscillator (commonly 9,3,3) is recovering from oversold territory (sub-30) following the plunge to 620. The Stochastic %K is likely rising and potentially crossing above %D, suggesting a near-term positive momentum shift is underway, although confirmation is needed.
Bollinger Bands
The Bollinger Bands (20-period, likely 2 Std Dev) exhibited significant expansion during the sharp downturns, particularly around the July 29th plunge, reflecting heightened volatility. The sharp rebound on July 30th propelled the price from below the lower band back towards the middle band (~20-period SMA, approx 650-660). This band contraction after volatility expansion suggests a possible stabilization phase is beginning. Closing near the middle band signals reduced directional momentum bias in the immediate term.
Volume-Price Relationship
Volume provides strong contextual validation. The precipitous drop on July 29th occurred on significantly elevated volume (11,468,148 shares, the highest in months), confirming the bearish conviction. The subsequent recovery rally on July 30th also came on strong volume (5,862,844), higher than the average of preceding stable days, suggesting buyer conviction entered at the 620 support level. This volume profile supports the potential validity of the bounce off the key 620 support.
Relative Strength Index (RSI)
Calculating a 14-period RSI: Following the steep decline towards 620, the RSI fell sharply into oversold territory (likely dipping below 30). The subsequent 4.91% rally causes the RSI to recover significantly (estimated in the 45-50 range as of close 650.47), moving towards neutral territory but not yet overbought. While the dip below 30 provided a traditional oversold signal, the lack of bullish divergence prior to the bounce reduces its strength as an early reversal warning. The current RSI level does not indicate an extreme condition.
Fibonacci Retracement
Applying Fibonacci retracement to the major swing low near 600 (early May) and the swing high near 780 (late June): Key retracement levels are derived:
78.6%: ~615
61.8%: ~635
50%: ~690
38.2%: ~745
The recent plunge found potent support precisely at the 78.6% retracement level (approx 615-620), aligning with the July 29th low. The decisive bounce off this deep retracement level (78.6%) signals strong buying interest and represents a significant confluence point with the price-based support zone and heavy volume validation.
Confluence & Divergence
Significant confluence exists at the 615-620 support level: price action formed a hammer-like candle/bullish reversal signal, volume surged confirming buyer/seller capitulation, it represented the deep 78.6% Fibonacci retracement, and the price is now attempting to reclaim the 100-day MA (~625). A primary divergence involves momentum oscillators: while price hit a new relative low near 620 (compared to late June), MACD likely made a higher low or began converging, suggesting weakening downward momentum that preceded the sharp bounce. Divergences between MACD (which might be hinting at stabilization) and KDJ (which is still recovering from oversold) are less critical but warrant monitoring for confirmation signals as momentum evolves. The technical structure suggests SPOT may be attempting to stabilize after a sharp correction, with a key near-term battle unfolding around the 100-day MA and Fibonacci 61.8% level. Reclaiming 700-710 resistance would signal stronger recovery potential, while failure to hold above 620 could lead to a test of the critical 600 psychological and longer-term support area.