AVGO breaks below key technical support level
Broadcom Inc. (AVGO) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, AVGO ended the week 0.81% higher at 317.77 after losing $6.20 (-1.91%) today, strongly underperforming the Nasdaq 100 (0.29%) ahead of tomorrow's Presidents' Day market holiday. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 320.95, the share confirmed its breakout through the prior session low after trading up to $3.85 below it intraday.
Daily Candlestick Chart (AVGO as at Feb 14, 2020):
Friday's trading range has been $8.60 (2.65%), that's above the last trading month's daily average range of $6.30. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for AVGO.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. Despite a strong opening the market closed below the previous day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on December 19, 2019, AVGO lost -1.57% on the following trading day. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 316.40 (S1). Prices broke below the key technical support level at 322.50 (now R1), which is likely to act as resistance going forward. Broadcom ran into sellers again today around 325.70 for the third trading day in a row after having found sellers at 325.46 in the prior session and at 325.09 two days ago.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
With prices trading close to this year's high at 331.58, upside momentum could accelerate should the stock be able to break out to new highs for the year.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Broadcom. Out of 294 times, AVGO closed higher 58.84% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 61.56% with an average market move of 1.70%.