Don't Ignore This Chart!

BroadCom Holds Gap Zone and Resumes Breakout


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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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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