Don't Ignore This Chart!

Will Price Follow Volume for Broadcom?


Broadcom (AVGO) fell on hards time in December with a decline to the breakout zone, but this zone ultimately held and it looks like the uptrend is ready to resume. First and foremost, AVGO is in a long-term uptrend after the big breakout in October and the 52-week highs in November. This long-term uptrend means I am focused on bullish setups and pullbacks within the uptrend. 

The December pullback looks like a classic correction because the stock bounced right where it should. Notice that broken resistance turned into support and the stock held the throwback to this breakout zone. Second,  the stock retraced 61.8% of the prior advance and this amount is normal for correction within an uptrend (think 3 steps forward and 2 steps backward). 

The correction ended with last week's breakout on good volume. AVGO surged on support with a big move on Tuesday and followed through with further gains the last few days. Notice that upside volume outpaced downside volume the last few weeks. This volume pattern pushed OBV to a new high and I would expect price to follow. 

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

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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