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Spotify Technology SA (NYSE 🙂 reached an agreement Thursday with Warner Music Group Corporation (NASDAQ: WMG) to leverage Warner’s catalog of artists, songwriters and musicians to create original podcasts.
The news has come at the perfect time for the Spotify stock chart and has helped confirm the breakout of a bullish pattern.
Spotify’s chart: Spotify shares closed slightly below the resistance level at $ 299.45. From March 4 to April 13, Spotify shares fell in an uptrend inverted shoulder head shoulder pattern. An inverted shoulder head shoulder pattern can appear at the bottom of a downtrend stock and is considered a reversal signal.
On March 31, Spotify shares rose above the resistance level to $ 266.15 and completed the head and right shoulder of the pattern for the next eight trading days. This provided traders and investors with the information needed to draw the pattern’s clavicular line. On April 13, the eight-day exponential moving average (EMA) crossed above the 21-day EMA, which is bullish, and the stock rallied 5%. It is now trading above the two EMAs that are typically tracked.
The measured movement of a shoulder head shoulder pattern is calculated by measuring the distance from the clavicular line or neck line to the maximum or ceiling of the head. In the case of Spotify, the distance is 13%. Technical traders can then measure 13% in the opposite direction of the head to see the measured move. The measured move indicates the level to which a stock could move if it completes the pattern. In Shopify’s case, the stock price could hit $ 325.73, which lines up perfectly with the next resistance level above the head of the chart.
The bulls want the pattern to complete, which would yield an 8.5% return on Thursday’s closing price and for Spotify to hit $ 300 on Friday. Upon completion of the pattern, Shopify stocks could consolidate below the next resistance level before breaking above it. If the stock manages to break down from the resistance level of $ 325.73, it could head towards the level of $ 342 where there is another resistance area and a gap.
Bass players want the measured movement to stop and Spotify to return to the clavicular line or neck line. If Spotify shares fall below the clavicle line or neck line, they could fall to the next support area of $ 266.15.
Read the article also in Benzinga Spain
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