Key Takeaways
\nBroadcom shares rallied to a record high this week as the chipmaker positions itself as a key competitor to AI favorite Nvidia. The relative strength index warns of overbought conditions, with the indicator reaching a level that preceded major consolidation phases in the stock during late 2021 and mid-2023.Bars pattern analysis projects a potential bullish price target of around $680 by October next year.Investors should watch key support levels on Broadcom’s chart near $250 and $185.<\/p>\n
Broadcom (AVGO<\/a>) shares rallied to an all-time high this week as the chipmaker positions itself as a key competitor to AI favorite Nvidia (NVDA<\/a>).\u00a0\n<\/p>\n The stock surged nearly 10% to a record close near $370 Wednesday, before pulling back slightly in Thursday’s session. They’ve added more than half their value since the start of the year, with a close to 20% gain over the past five days alone, boosted by the company\u2019s strong quarterly results<\/a>, a new $10 billion customer<\/a>, and the resurgence of the AI trade<\/a> after Oracle (ORCL<\/a>) reported a massive increase in its backlog<\/a>.\n<\/p>\n In a note to clients on Monday, Melius Research analysts said they expect Broadcom could gain about 30% of the AI compute market<\/a>, while Nvidia\u2019s market share falls over time.\n<\/p>\n Below, we break down the technicals on Broadcom\u2019s weekly chart and identify key price levels to watch after the stock\u2019s recent bullish run.\n<\/p>\n RSI Reading Signals Potential Consolidation <\/p>\n After retracing just below the 50-week moving average in March, Broadcom shares have staged an impressive reversal<\/a>, with gains accelerating recently after the chipmaker\u2019s quarterly results.\n<\/p>\n While above-average trading volume<\/a> has signaled buying conviction, the relative strength index<\/a> warns of overbought<\/a> conditions, with the indicator reaching a level that preceded major consolidation<\/a> phases in the stock during late 2021 and mid-2023.\n<\/p>\n Let\u2019s use technical analysis<\/a> to forecast how a long-term uptrend<\/a> for Broadcom could play out, and also identify support levels<\/a> worth watching during potential retracements.\n<\/p>\n Where Is Broadcom\u2019s Uptrend Headed Next? <\/p>\n Investors can use bars pattern analysis to project a potential bullish price target<\/a> and speculate how high the stock could go from here.\n<\/p>\n When applying the technique to Broadcom\u2019s chart, we take the stock\u2019s uptrend from May 2023 to June 2024 and overlay it from the start of last week\u2019s bullish move. This indicates a period of consolidation for several months before a possible rally toward $680 by October next year, if price action<\/a> rhymes with the prior trend.\u00a0\n<\/p>\n The earlier trend began with two weekly price bars that delivered a combined gain of 27%, compared to the over 20% cumulative advance of the two most recent weekly bars.\n<\/p>\n Key Support Levels Worth Watching <\/p>\n During potential pullbacks<\/a> in the stock, it\u2019s initially worth tracking the $250 level. This area on the chart may provide support near the stock\u2019s December and January twin peaks<\/a>.\n<\/p>\n Selling below this level could see the Broadcom shares revisit lower support around $185. Investors may seek entry points<\/a> in this location near the upper range of a consolidation period that formed on the chart between June and November last year.\n<\/p>\n