AVGO closes above its opening price after recovering from early selling pressure
Broadcom Inc. (AVGO) Technical Analysis Report for Aug 05, 2020 | by Techniquant Editorial Team
Moving higher for the 6th day in a row, AVGO ended Wednesday at 329.54 edging higher $1.15 (0.35%), slightly outperforming the Nasdaq 100 (0.26%). Today's close at 329.54 marks the highest recorded closing price ever. Trading up to $2.42 lower after the open, the stock managed to reverse during the session as bulls took control ending the day above its opening price. Closing above Tuesday's high at 328.59, the market confirmed its breakout through the previous session high after trading up to $2.99 above it intraday.
Daily Candlestick Chart (AVGO as at Aug 05, 2020):
Wednesday's trading range has been $5.75 (1.75%), that's below the last trading month's daily average range of $7.05. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for AVGO.
One bullish candlestick pattern matches today's price action, the Bullish Spinning Top.
After trading down to 325.83 earlier during the day, Broadcom bounced off the key technical support level at 328.11 (S1). The failure to close below the support might increase that levels significance as support going forward. When prices bounced off a significant support level the last time on Monday, AVGO gained 2.23% on the following trading day.
With another close above the upper Bollinger Band, prices are confirming their strong upward momentum in the short-term. A drop back into the Bollinger Band on the next trading day though could signal a potential change in momentum that might lead to a correction back down towards the center of the Bollinger Bands at 315.14.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Spinning Top" stand out. Its common bullish interpretation has been confirmed for Broadcom. Out of 198 times, AVGO closed higher 56.57% 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 63.13% with an average market move of 1.87%.