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AVGO Trade Setup

Kudos to @snipertrader for pointing this one out in the trading room. AVGO (Broadcom Limited) will trigger a short entry on any move back below 149.00, which is just below the top of the triple top pattern shown on the daily chart below.  AVGO just recently experienced a marginal breakout above triple-top resistance. While bullish on face value, this recent breakout comes on a divergent high plus mediocre volume.. not below average, but not impressive either. Factor in the 60-minute rising wedge & I'd put good odds that this proves to be a bull trap/false breakout.My two price targets, as well as the measured target for the triple top pattern, are shown on daily chart. T1=115.63, T2 (current final target)=96.15 with a suggested stop on a daily close above 153.50.

AVGO daily March 21st

AVGO daily March 21st

 

This fully mature 60-minute bearish rising wedge pattern, confirmed via divergences, looks ripe for a breakdown. A breakdown below this 60-minute wedge & the first (horizontal) support level below, should it occur, will coincide with a move back down below the triple top breakout, considerably adding to the bearish case for Broadcom.

AVGO 60-minute March 21st

AVGO 60-minute March 21st

Zooming out to the weekly chart to confirm the longer-term bearish case, a break below both the blue primary uptrend line + the lower white horizontal support line should send AVGO much lower in the coming months/years.

AVGO weekly March 21st

AVGO weekly March 21stAVGO

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Mar 21, 2016 11:13am|Categories: Completed Trades - Short|Tags: |2 Comments

2 Comments

  1. snipertrader March 21, 2016 11:29 am at 11:29 am

    @rsotc Thanks Randy for your work on this one to take a closer look. BTW, my fundamental/relative backdrop on this one is that AVGO ( being the bell weather in their sub sector – communications semis) held up so incredibly well and never really broke down ( while most other semi’s did break down really hard in over the last 6 months on a rolling basis ), that AVGO’s turn to break down and give up the game ( if we are really entering a bear market ) is just a matter of time and therefore potential much higher R/R on this than NDX or XSD/SOXX. Of course if we are still in a big bad bull market, then AVGO on the flip side would appear to be the leader to the upside in their sub sector based on their incredible relative strength exhibited in what would then have turned out to be a giant consolidation. Either way a potential play. R/R to the downside now, but if bull re-asserts and confirms the AVGO prime candidate for continued new highs to emerge due to no overhead resistance if it successfully holds it’s break out combined with their bell weather status in their space. So a little for the bears and bulls here! Thx.

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  2. davenchop March 23, 2016 11:43 pm at 11:43 pm

    how bout this for a contrarian indicator………

    Out of 29 analysts covering Avago Technologies Limited (NASDAQ:AVGO), 28 rate it “Buy”, 0 “Sell”, while 1 “Hold”. This means 97% are positive. Avago Technologies Limited was the topic in 44 analyst reports since August 4, 2015 according to StockzIntelligence Inc. B. Riley & Co initiated the stock on February 26 with “Buy” rating.

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