The Decline of Broadcom Stock: Analyzing the Momentum Shift and Key Price Levels to Watch

Investors in Broadcom (AVGO) witnessed a nearly 4% decline in the company’s shares on Monday, reflecting a broader sell-off in the chipmaker sector. This dip comes as investors take profits in some of the year’s best-performing stocks that have been riding the wave of Wall Street’s artificial intelligence (AI) trend. The insatiable demand for hardware to power AI technologies has been a significant driver for companies like Broadcom.

Shifting Momentum and Record Highs

The momentum in Broadcom shares took a turn last Tuesday when the stock reached a new record high but then experienced an intraday reversal, closing lower for the day. Since then, the stock has formed three consecutive red bars on above-average volume, indicating a strong conviction behind the selling pressure from larger market participants.

Key Retracement Levels to Monitor

As the stock price of Broadcom continues to face downward pressure, there are several key retracement levels that investors should keep an eye on:

$1,410 Level:

This level may attract buying interest as it aligns with the 50-day moving average and a horizontal line connecting multiple price peaks over the past few months.

$1,225 Level:

Support may be found around this level, near a trendline that connects price action between February and May.

$1,150 Level:

If the shares experience a steeper decline, this level could serve as a support area, coinciding with the prominent December 2023 swing high and the rising 200-day moving average.

$1,000 Level:

In the event of a significant retracement, the psychological $1,000 level could be a critical support zone, currently 37% below Monday’s closing price. This level also finds support from the November 2023 swing high.

To identify potential signs of buyers re-entering the market, investors should watch for bullish price patterns like hammer candlesticks or piercing patterns at these key price levels.

Following Monday’s 3.7% decline, Broadcom shares have now lost 14% of their value since hitting their all-time intraday high last Tuesday.

It is important to note that the opinions and analyses expressed in this article are for informational purposes only. Investors should conduct their own research and consult with financial advisors before making any investment decisions.

Disclaimer: The author of this article does not own any securities mentioned in this piece.

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