Stock of the day: Broadcom

In today’s Stock of the Day, we’re coming back to Broadcom, which we already analyzed on our portal twice, the last time being at the end of June. The current situation on the chart looks great for the buyers in the long-term, and promising for sellers in the short-term. Let me explain.

In the long-term, the price is influenced by the big inverse Head and Shoulders pattern (grey) that emerged in September and October. At the beginning of November, AVGO managed to break the neckline of this formation (red) and climbed higher, breaking a very important down trendline (blue) on the lower-than-expected-CPI-day, so last Thursday. So that wraps the long-term sentiment, its positive and the target is on the yearly down trendline (green).

As for the short-term situation, the recent rise was very rapid, so traders may look for a place to take some profits, and yesterday they made a great attempt to initiate this process. The daily candle happened to be a Shooting Star on the 38,2% Fibonacci, which almost always is a great signal to sell. In a nutshell, with the current situation being as it is, all major drops should be used to buy AVGO with more attractive prices because this instrument is in a very positive, long-term environment.