news that Spotify Technology SA JOB will reduce its workforce by 6% gave the institutions a reason to move up about 4.5% on Monday to regain the 200-day simple moving average (SMA) as support.

The 200-day SMA is both a strong support level (when a stock is falling) and a strong resistance area (when a stock is rising). It’s rare for a stock to drop below or above 200 days on the first try during regular trading hours, which means the algorithms will sometimes push a stock above or below post-market or pre-market levels.

With multiple Big tech companies announcing layoffsTraders are now optimistic in the hope that these companies will be able to reduce spending enough to continue showing growth.

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Spotify employed around 9,800 people at the end of the third quarter. A 6% layoff means about 590 employees will lose their jobs.

Although Spotify is likely to pull back in the coming days to at least test the 200-day SMA for support, the stock is trading in a strong uptrend on the daily chart.

The Spotify chart: The Stockholm-based company has been trading in an uptrend since December 20, when the stock displayed a bullish double bottom pattern near $72. Spotify’s most recent higher low was formed at $88.41 on Jan 12 and the most recent confirmed higher high was printed at $93.28 the previous day.

• On Monday, Spotify was beginning to show signs that the next higher high might occur as the stock looked to print a Doji candle. When a doji candle is at the top of an uptrend, it can indicate that a downside reversal is looming.
• If Spotify returns lower on Tuesday or Wednesday, traders and investors can watch if the stock is forming a bullish reversal candle like a doji or hammer candle near the 200-day SMA, which could indicate that the next higher low has occurred. If the stock can stay up…