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Key Takeaways
- Broadcom shares may see heightened volatility this week, with the chipmaker slated to release its fiscal third-quarter earnings report after the closing bell on Thursday.
- Investors will likely be scrutinizing the company’s AI sales growth and full-year outlook, which have benefited in recent quarters from growing demand for its custom AI chips.
- Broadcom shares reclaimed the 50-day moving average last month after a steep correction, through the recovery has occurred on decreasing volumes, indicating a lack of institutional activity.
- Investors should monitor key lower chart levels at $157 and $141, while also watching important higher levels around $168 and $195.
Broadcom (AVGO) shares may see heightened volatility this week, with the chipmaker slated to release its fiscal third-quarter earnings report after the closing bell on Thursday. Investors will likely be scrutinizing the company’s artificial intelligence sales growth and full-year outlook, which have benefited in recent quarters from growing demand for its custom AI chips.
The chipmaker’s stock, which trades around 11% below its record close, spent most of last month recovering from a recent steep correction that was triggered by a broad-based sell-off in technology stocks and profit taking after the shares underwent a 10-for-1 stock split in July.
Below, we zone in on Broadcom’s technicals and identify key price levels to watch out for leading into the company’s quarterly report.
Decreasing Volume Accompanies Recent Recovery
Since setting a record high in mid-June, Broadcom shares fell as much as 31% before staging an impressive recovery throughout most of August to reclaim the 50-day moving average (MA) by the end of the month. However, it’s worth pointing out that recent buying has occurred on decreasing volume, indicating a lack of institutional activity.
Leading into the Broadcom’s quarterly results, investors should keep their eyes peeled on several important chart levels that could come into focus.
Lower Price Levels to Monitor
The first lower price level in play sits around $157. This area, currently situated about 4% below Friday’s close, could find support from a horizontal line connecting recent swing lows in June and August.
A failure to hold this important location could see the shares drop to the $141 area, a location on the chart where investors may look for buying opportunities near a four-month period of sideways drift in the stock between Match and June
Higher Price Levels to Watch
An initial move higher from current levels may propel a jump to $168, where the stock could run into resistance near several gap trading levels that formed on the chart in June and July. The area also sits closely positioned to last month’s high and a trendline joining the June and August peaks.
To project a price target above the all-time high (ATH), we can extract the stock’s trending move from December to March that commenced with similar price action to last month’s recovery and reposition it from the August swing low. Such a technique forecasts an upside target of around $195, about 5% above Broadcom’s record high.
Broadcom shares were down 1.3% at $160.70 in premarket trading around 7:10 a.m. ET Tuesday.
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As of the date this article was written, the author does not own any of the above securities.