Broadcom Ltd. (AVGO) looks like it could be making a double top in the $250-$260 area. This could turn out to be a high-level consolidation pattern for the Action Alerts PLUS name, but right now I am seeing enough technical warnings to shoot first and ask questions later.
Let me show you what I mean.
In this daily bar chart of AVGO, below, we can see that prices have climbed close to $100 per share since early December. Got gains? Prices are above the rising 50-day moving average line but it won't take much more of a decline to break it. One big indicator divergence is the On-Balance-Volume (OBV) line. Since March the price of AVGO has made higher highs but the OBV line has not. This lack of aggressive buying is not a good sign.
In the lower panel the Moving Average Convergence Divergence (MACD) oscillator is turning down to a bearish crossover at a much lower high than the early June high. Another bearish divergence.
In this daily candlestick chart of AVGO, below, we can see the doji and long bearish candle (red) at the June peak and the bearish engulfing pattern this week. The weaker OBV line can be see better on this chart as well as the potential cross of the MACD averages.
In this weekly chart of AVGO, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line has diverged from the price action since February. The weekly MACD oscillator is toppy.
In this Point and Figure chart of AVGO, below, we can see that a break below $229.23 will probably be needed to really put the bear in charge.
Bottom line: AVGO has given off a number of warning signs. Closes below $245 and then $230 will confirm that the intermediate-term trend is turning down.