Broadcom Extends Rally With 12.30% Six-Day Surge As Technicals Flash Overbought Signals

Broadcom (AVGO) rose 3.27% in the most recent session, marking its sixth consecutive daily gain with a cumulative 12.30% advance during this period. This upward momentum reflects strong bullish sentiment, though technical indicators warrant comprehensive examination to assess sustainability.
Candlestick Theory
Recent price action shows a consistent bullish pattern with six consecutive white candles, indicating sustained buying pressure. Key resistance emerges near $258 (June 3 high), while support is established at $249.40 (same session low). The absence of long upper wicks suggests conviction in the uptrend, though proximity to the yearly high warrants caution for potential exhaustion signals in subsequent sessions.
Moving Average Theory
The 50-day SMA ($218.50) maintains its position above the 100-day ($205.80) and 200-day ($191.20) averages, confirming the primary uptrend. Current price ($256.85) trades significantly above all three moving averages, with the 50-day providing dynamic support during the May pullback. The ascending alignment of these averages reinforces bullish momentum, though the widening gap between price and 200-day SMA may indicate overextension risk.
MACD & KDJ Indicators
MACD (12,26,9) exhibits a strengthening bullish crossover with histogram bars expanding above the signal line, confirming accelerating upward momentum. Meanwhile, the KDJ oscillator shows K-line (86) and D-line (82) in overbought territory, with J-line (94) suggesting extreme bullishness. While both indicators align in signaling strength, the KDJ's prolonged overbought condition implies heightened vulnerability to profit-taking reversals.
Bollinger Bands
Price consistently rides the upper Bollinger Band (20-period, 2SD) during the recent rally, indicating strong directional momentum. Band width expansion from May's consolidation phase confirms volatility re-entry. The absence of price rejection from the upper band demonstrates unusual strength, though such persistent upper-band adherence historically precedes short-term consolidation.
Volume-Price Relationship
Recent gains are validated by rising volume, with the June 3 session recording 30.28M shares traded – significantly above the 20-day average of 25.7M. This volume expansion during upside moves contrasts with lower volume during May's pullback, confirming accumulation. Notably, the volume-weighted average price (VWAP) slopes upward, reinforcing the bullish structure.
Relative Strength Index (RSI)
The 14-day RSI reads 78, solidly in overbought territory. While this reflects strong momentum during the breakout, it exceeds the 70 warning threshold by a considerable margin. Historical parallels show similar RSI peaks coincided with near-term corrections in April 2025 and July 2024. This divergence between price momentum and oscillator positioning suggests consolidation may be needed to restore equilibrium.
Fibonacci Retracement
Using the March 2025 low ($136.99) and current high ($257.88) as anchor points, key retracement levels emerge at $216.67 (23.6%), $203.88 (38.2%) and $197.43 (50%). Recent price action respected the 23.6% level ($216.67) as support in early May. Current positioning shows no major Fib resistance until the 161.8% extension near $272, though psychological resistance at $260 may trigger short-term reversals.
Confluence and Divergence Observations
Confluence appears across momentum indicators (MACD, volume, moving averages) confirming the dominant uptrend. However, significant divergence emerges between overbought oscillators (RSI 78, KDJ above 80) and continued price advances. This divergence, coupled with volume that – while elevated – remains below January's capitulation levels, suggests the rally may need consolidation before further gains. The $250 psychological level now converts to support, with breach below potentially testing the 23.6% Fib level at $216.67. While technical structure remains bullish, probabilistic near-term resistance exists between $258-260.