Stocks fell nearly 7% in extended trading on Thursday
Key Points
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Shares of Broadcom fell nearly 7% in extended trading on Thursday after the chipmaker reported fiscal third-quarter results that beat expectations but also gave a low revenue forecast for the current quarter.
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The stock is positioned to fall from a symmetrical triangle pattern on Friday, following the company’s weaker-than-expected sales outlook, potentially signaling the start of a new downtrend.
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Investors should keep an eye on the key lower price levels on Broadcom’s chart: $141, $120, $104, and $91.
Broadcom (AVG) shares fell nearly 7% in extended trading Thursday after the chipmaker reported fiscal third-quarter results that beat expectations but gave a weak revenue forecast for the current quarter. Softer spending in its broadband business and other divisions partly offset strength in its artificial intelligence (AI) segments.
The Silicon Valley chipmaker’s shares, which have risen about 75% over the past year through Thursday’s close, have benefited from growing demand for its custom chips and networking components that companies use to power and build AI applications and infrastructure.
Below, we take a closer look at Broadcom’s chart and use technical analysis to identify the post-earnings chart levels that investors are likely to keep an eye on.
Symmetrical triangular distribution
Broadcom shares have been trading in a symmetrical triangle with declining volumes since mid-June. The price is sending an ominous signal ahead of the chipmaker’s quarterly report by testing the lower trendline of the pattern.
The stock is positioned to stage a significant triangle breakout on Friday following weaker-than-expected sales guidance, potentially starting a new downtrend. Broadcom shares fell 6.7% to $142.53 in after-hours trading Thursday.
Key Lower Broadcom Chart Levels to Watch
With Broadcom shares expected to open sharply lower on Friday, investors should focus on several key price levels.
The initial price is around $141, an area on the chart where the stock could find support near a horizontal line connecting a consolidation range between early March and early June toward the end of the stock’s multi-year uptrend.
A move below this level could lead to a sell-off to the $120 level. Traders can view this location on the chart as a high probability buy area due to its proximity to two prominent swing lows that formed in March and April.
The next level to watch is at $104, where shares could find support near the bottom of an early January pullback that followed the stock’s strong performance in December.
Finally, a deeper correction could see Broadcom shares fall to the $91 region. This level would likely attract bargain hunters looking for buying opportunities near a trendline that connects multiple peaks and troughs from May to December of last year.
Interestingly, this location also corresponds to a measured downward move 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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