BROADCOM made a Top on the 2year Channel. Potential danger aheadExactly 1 month ago (November 18, see chart below) we gave the buy signal on Broadcom Inc. (AVGO), which turned out to be a big success as shortly after the stock catapulted past our $223 Target:
This time however we share with you an analysis that is calling for profit taking on this amazing rally as technically it is coming to an end. The price hit yesterday the top (Higher Highs trend-line) of the 2-year Channel Up, which has approached another 3 times during that time.
As you can see, the pattern's structured Legs and Phases are cyclical and repeat themselves. The current Top seems to be similar to the previous Highs (orange circles) that initiated the re-accumulation phases before resuming the uptrend for the final top (red circles) of the Bullish Leg.
Both of those pre-Top Highs (orange circles) and their re-accumulation phases that followed, touched the 1D MA200 (orange trend-line) before the final rally of the Bullish Leg. As a result, we won't turn bullish again on AVGO until it tests the 1D MA200 again, which given the aggression of the recent pump, the pull-back could be equally strong.
After the re-accumulation Phase is completed, we will resume our long-term bullish Target of $285.00. That represents a +121.85% rise from the August 05 2024 Low, which is the % rise that both previous Bullish Legs had.
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