BroadCom (AVGO) is showing upside leadership again with a flag breakout last week and a 2% surge today. Overall, the stock advanced to a 52-week high in August and then embarked on a long consolidation. A large symmetrical triangle formed as the stock traded flat from September to early December. The bigger trend was clearly up during this consolidation and a consolidation within an uptrend is usually a bullish continuation pattern. It represents a rest within the uptrend and a breakout signals a continuation higher. AGVO broke out with a gap-surge in mid December and then fell back with a falling flag into early January. Notice that the gap zone held in early January as the stock surged through flag resistance. This flag breakout reverses the short-term pullback and opens the door to new highs. Chartists can use the early January low to mark support.
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--Arthur Hill CMT
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