Broadcom Slides 5.24% In Three Days As Technicals Signal Further Downside Risk

Broadcom (AVGO) experienced a 3.55% decline in its most recent trading session, closing at $294.91, marking its third consecutive daily loss with a cumulative 5.24% drop over this period. This analysis evaluates the technical landscape using multiple methodologies to identify key levels and potential price trajectories.
Candlestick Theory
Recent price action shows Broadcom struggling near resistance at $302.90–$317.35 (established August 13–19), with three successive bearish candles closing near session lows. The current structure suggests vulnerability to further downside, with immediate support emerging around the $291.40–$292.39 zone (August 4 and 19 lows). A decisive break below $291.40 could signal a deeper retracement, while holding this floor may establish a base for consolidation.
Moving Average Theory
Broadcom is testing critical moving average support levels. The 50-day SMA (approximated near $300) was breached during the current downturn, indicating weakening short-term momentum. The 100-day SMA (estimated around $280) and 200-day SMA (approximately $220) remain ascending, preserving the longer-term uptrend. Sustained trading below the 50-day SMA may extend the correction toward the 100-day SMA. A bullish revival would require reclaiming the 50-day SMA to neutralize near-term bearish pressure.
MACD & KDJ Indicators
The MACD indicator is in bearish territory, with its signal line crossing below the MACD histogram recently, suggesting negative momentum. Conversely, the KDJ oscillator reveals a deeply oversold condition, with the %K line registering approximately 10.1—its lowest level in three months. This divergence between KDJ’s oversold signal and prevailing bearish momentum cautions against aggressive downside bets, as oversold rebounds become increasingly probable. The KDJ may precede a potential reversal signal before MACD confirmation.
Bollinger Bands
Bollinger Bands highlight expanding volatility, with price currently trading below the 20-day SMA ($299.22) but above the lower band (~$279.22). This placement indicates that while bearish pressure persists, the stock is not yet at extreme oversold territory relative to its recent range. Continued trading near the lower band could signal an impending oversold bounce, whereas a breakdown below the band might accelerate selling pressure.
Volume-Price Relationship
Volume patterns exhibit inconsistencies during the recent decline. The initial down day (August 15) saw elevated volume (22.8 million shares), followed by lower volume on subsequent declines (August 18: 14.7 million). The most recent session showed renewed volume expansion (19.8 million), yet it remained below the August 15 peak. This lack of capitulatory volume suggests sellers retain control but haven’t exhausted themselves, potentially extending the correction phase.
Relative Strength Index (RSI)
The 14-day RSI measures approximately 44.66, placing it in neutral territory. While approaching oversold thresholds (<30), it has not yet reached levels that typically trigger strong reversals. The RSI’s moderation contrasts with the KDJ’s oversold reading, creating a divergence that may reflect underlying accumulation but warrants vigilance for further downside before a sustainable recovery materializes.
Fibonacci Retracement
Using the recent swing high of $317.35 (August 13) and swing low of $291.40 (August 4), key Fibonacci levels are established. The price has breached the 78.6% retracement ($296.95), indicating bearish momentum. Confluence exists near the $291.40–$292.39 zone, aligning with the psychological round number and prior swing low. This area represents critical support, with violation opening risk toward the 100% extension at $291.40. A rebound from this cluster would target resistance near $296.95 (78.6%) and $301.31 (61.8%).
Concluding Synthesis
Multiple indicators highlight Broadcom’s precarious technical posture. Bearish confirmation stems from the MACD crossover, volume-supported downtrend, Fibonacci breakdown, and loss of the 50-day SMA. However, oversold KDJ readings and Bollinger Band positioning suggest waning downside momentum. Critical support resides near $291.40–292.39—failure here may prompt a deeper pullback toward the 100-day SMA ($280), while a rebound could challenge $296.95–$301.31 resistance. The absence of RSI capitulation and volume confirmation indicates potential short-term vulnerability, though the larger uptrend remains intact. Traders should monitor price action near $291.40 for reversal signals or breakdown confirmation.