Triangle Pattern Signals Risk of Breakdown
Although it has held up so far, the stock of Broadcom Inc. (AVGO) is at risk of breaking down from a nine-week consolidation range, taking the form of a symmetrical triangle pattern. Resistance for the range has been defined near the 100-day moving average, which began to fail as support late last year. Two recent upswings successfully tested it as resistance, resulting in confirmed resistance and a subsequent downturn.
Lower Boundary Tests Highlight Weakness
In addition, weakness is indicated by the test of support near the lower end of the pattern, marked by the 200-day moving average. Bearish momentum will soon be confirmed if the 20-day moving average crosses below the 200-day line. A drop below the lower boundary line of the triangle was triggered on both Thursday and Friday, although there was no downside follow-through. So far, support near the lower line has held, but on Friday the session ended below the line for the first time, a sign of weakening.
Ascending Channel Adds Context to Support
There is also the middle line of an ascending channel that has historically provided support for the triangle. If broken, the pattern would suggest the possibility of a decline to the lower boundary line of the formation. Even if that level is not reached, this increases the likelihood that the closer lower targets will be tested.
Breakdown Confirmation and Targets
A breakdown from the triangle will be confirmed on a drop below a higher swing low at $307.20. That may lead to a decisive decline towards lower support zones. The bearish outlook would remain unless there was a swift recovery above the 200-day moving average, now near $325.19. If a breakdown is confirmed with a daily close below the trigger, two potential target zones identified, with the lower zone being more significant.
Key Support Zones Below
The first lower support zone is from around $281.87 to $276.78, consisting of a previous support level and a 50% retracement of the prior upswing, respectively. Further down is the confluence of several indicators, including a peak from December 2024, the 61.8% Fibonacci retracement, and the significant 100-week moving average at $241.35. This 100-day average was confirmed as support during the 2025 bearish correction, tying back to the initial risk of breakdown noted earlier.
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