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December 4 Chart of the Day - Spotify

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Streaming music provider Spotify (SPOT) announced it plans to lay off 17% (roughly 1,500) of its employees in a third round of layoffs this year.  Its stock price rose around 9% higher in early trading on Monday following the news.

Typically we like to review charts with much more historical price action than a chart like this but given its short existence the chart is already exhibiting normal type price behavior.

On the monthly chart we can see that after the company's IPO (initial public offering) price established $198.99 as a high within 4 months before falling and drifting sideways for a about a year and a half.  From a technical analysis perspective this could be considered "price discovery" because there was little to no previous price structure at those levels.

About the time the global pandemic started in 2020 we can see that price rose aggressively for about a year from the low 100s to set an all time high (ATH) at $387.44 before plummeting all the way back down to $69.29.  Again, more price discovery.

Since establishing that low, price has drifted back up towards the initial high that it set shortly after going public: $198.99.

In fact, today's news seemed to be a catalyst to move price back to that level.  All said, one can begin to see what has been said about markets having a good memory and gravitating towards familiar price territory.

Down on the weekly chart we've incorporated additional price action tools such as Fibonacci and trend to identify price levels of interest in both directions from which investors and traders can develop their plans from.

So what's next? 

We don't make predictions...

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

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