Shares of Broadcom (AVGO) fell nearly 7% in extended trading on Thursday after the chipmaker released its fiscal third-quarter results. While the results exceeded expectations, the company issued light revenue guidance for the current quarter. This news has caused concern among investors, leading to a potential breakdown in the stock’s chart pattern.
Broadcom has experienced significant growth over the past year, with its stock surging around 75%. This growth can be attributed to the increasing demand for its custom chips and networking parts used in AI applications and infrastructure. However, softer spending in its broadband business and other divisions have partially offset this strength.
The stock has been trading within a symmetrical triangle pattern since mid-June, with declining volume. Prior to the quarterly report, the price tested the lower trendline of the pattern, indicating a potential breakdown. Following the weaker-than-expected sales outlook, Broadcom shares fell 6.7% to $142.53 in after-hours trading on Thursday.
Investors should pay attention to several key price levels on Broadcom’s chart. The first level to watch is around $141, where the shares could find support near a horizontal line connecting a range of consolidation between March and June. If the stock moves below this level, a sell-off down to the $120 level is possible. This area could be seen as a buying opportunity due to its proximity to swing lows formed in March and April.
The next important level is $104, where the shares may encounter support near the low of an early January retracement. Finally, a deeper correction could bring the stock down to the $91 region. This level would likely attract bargain hunters as it aligns with a trendline connecting peaks and troughs from May to December last year. Interestingly, this location also corresponds to a measured move downside target calculated from the symmetrical triangle pattern.
It is important to note that the information provided in this article is for informational purposes only and should not be considered as financial advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.
In conclusion, Broadcom shares have experienced a significant decline following the release of its fiscal third-quarter results. The stock’s chart pattern suggests a potential breakdown, and investors should monitor key price levels for potential support. However, it is crucial to conduct thorough research and seek professional advice before making any investment decisions.
