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Key Takeaways
- Broadcom shares tumbled nearly 7% in extended trading on Thursday after the chipmaker posted fiscal third-quarter results that topped expectations but issued light revenue guidance for the current quarter.
- The stock sits positioned to break down from a symmetrical triangle pattern on Friday following the company’s weaker-than-expected sales outlook, potentially starting a new trend lower.
- Investors should monitor important lower price levels on Broadcom’s chart at $141, $120, $104, and $91.
Broadcom (AVGO) shares tumbled nearly 7% in extended trading on Thursday after the chipmaker posted fiscal third-quarter results that topped expectations but issued light revenue guidance for the current quarter. Softer spending in its broadband business and other divisions partially offsetting strength in its artificial intelligence (AI) segments.
The Silicon Valley-based chipmaker’s stock, which has surged around 75% over the past year through Thursday’s close, has benefited from growing demand for its custom chips and networking parts used by companies to power and build AI applications and infrastructure.
Below, we’ll take a closer look at Broadcom’s chart and use technical analysis to identify post-earnings chart levels that investors will likely be watching.
Symmetrical Triangle Breakdown
Broadcom shares have traded within a symmetrical triangle on declining volume since mid-June, with the price sending an ominous signal ahead of the chipmaker’s quarterly report by testing the pattern’s lower trendline.
The stock sits positioned to stage a significant breakdown from the triangle on Friday following its softer-than-expected sales outlook, potentially starting a new trend lower. Broadcom shares fell 6.7% to $142.53 in after-hours trading Thursday.
Key Lower Broadcom Chart Levels to Watch
With Broadcom shares projected to open sharply lower on Friday, investors should focus on several important price levels.
The first sits around $141, an area on the chart where the shares could find support near a horizontal line connecting a range of consolidation between early March and early June towards the end of stock’s multi-year uptrend.
A move below this level may see a sell-off down to the $120 level. Investors could view this location on the chart as a high probability buying area due to its proximity to two prominent swing lows that formed in March and April.
The next level to watch lies at $104, where the shares could encounter support near the low of an early January retracement that followed the stock’s strong performance in December.
Finally, a deeper correction may see Broadcom shares tumble to the $91 region. This level would likely attract bargain hunters looking for buying opportunities near a trendline joining multiple peaks and troughs from May to December last year.
Interestingly, this location also lines up with a measured move downside target when calculating the distance of the symmetrical triangle and subtracting that amount from the pattern’s lower trendline. ($62 – $153 = $91).
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As of the date this article was written, the author does not own any of the above securities.