The Broadcom price (AVGO) faces a 15% monthly fall, despite bouncing off a three-week low to $341.30 by the end of Tuesday’s North American trading session. In doing so, AVGO snaps an eight-month winning streak, even as the bulls refreshed the record top earlier in December.
The U.S. chipmaker suffered a heavy fall during last week after its fourth quarter (Q4) earnings highlighted challenges to gross margins, mainly due to more focus on the Artificial Intelligence (AI) business than the core chip developments that offer heavy margins.
Notably, Broadcom, Inc. did offer strong revenue and Earnings per Share (EPS) results. Additionally, the $1.7 trillion company has experienced 12-month revenue growth of 28%, and its stock has offered a median return of 140% since 2010.
On a technical note, the Broadcom price reversed from the 100-day Exponential Moving Average (EMA) but is yet to reverse Tuesday’s breakdown of an ascending support line from early June, now immediate resistance. Meanwhile, the four-hour (4H) chart of AVGO portrays a ‘megaphone,’ a trend-widening formation, with the latest rebound from the 200-bar EMA support within the chart pattern.
Can the chipmaker reverse recent losses? Let’s discuss in detail.
Broadcom Price: Daily Chart Teases Buyers
The Broadcom price reversal from a record high gained support from strong trading volume as it slipped beneath the 50-day EMA and a 6.5-month-old ascending trendline support, now resistance near $350.00.
Additionally, bearish signals from the Moving Average Convergence Divergence (MACD) momentum indicator (the red histograms) joined a pullback in the 14-day Relative Strength Index (RSI) to also highlight the downside bias.
However, Tuesday’s corrective bounce from the 100-day EMA can challenge the AVGO bears if the quote manages to jump back beyond the $350.00 support-turned-resistance.
Following that, the 50-day EMA of around $362.00 and October’s high near $386.50 could act as the seller’s final line of defense before resuming the Broadcom price run-up toward November’s peak of $403.00 and the all-time high (ATH) surrounding $415.00.
Alternatively, a daily closing beneath the 100-day EMA of $338.70 can drag AVGO toward the August monthly high near $317.35, ahead of highlighting the 200-day EMA support of $298.86.
It’s worth observing that the Broadcom price weakness past the 200-day EMA might reverse the quote’s rally since April, highlighting the 50.0%, 61.8%, and 78.6% Fibonacci retracements of its April-December upside, close to $276.00, $243.00, and $197.00 in that order.
Broadcom Price: Four-Hour Chart Highlights Megaphone
On the four-hour chart, the Broadcom price portrays an eight-week “megaphone” trend—a widening formation currently between $322.00 and $414.00.
That said, AVGO’s latest rebound from the 200-bar EMA joins the overheated RSI, close to the 30.00 oversold limit, to suggest a short-term recovery in the Broadcom price toward the 100-bar EMA resistance of $361.00.
Beyond that, the aforementioned pattern’s top near $414.00 could test the bulls.
On the contrary, a downside break of the 200-bar EMA, surrounding $227.00, will need validation from the megaphone’s bottom of $322.00 to aim for the deeper levels discussed on the daily chart.
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