Broadcom (AVGO) fell on hards time in December with a decline to the breakout zone, but this zone ultimately held and it looks like the uptrend is ready to resume. First and foremost, AVGO is in a long-term uptrend after the big breakout in October and the 52-week highs in November. This long-term uptrend means I am focused on bullish setups and pullbacks within the uptrend.
The December pullback looks like a classic correction because the stock bounced right where it should. Notice that broken resistance turned into support and the stock held the throwback to this breakout zone. Second, the stock retraced 61.8% of the prior advance and this amount is normal for correction within an uptrend (think 3 steps forward and 2 steps backward).
The correction ended with last week's breakout on good volume. AVGO surged on support with a big move on Tuesday and followed through with further gains the last few days. Notice that upside volume outpaced downside volume the last few weeks. This volume pattern pushed OBV to a new high and I would expect price to follow.
Thanks for tuning in and have a great day!
--Arthur Hill CMT
Plan your Trade and Trade your Plan
