AVGO dominated by bears dragging the market lower throughout the day
Broadcom Inc. (AVGO) Technical Analysis Report for Oct 27, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, AVGO ended Tuesday at 359.60 losing $3.44 (-0.95%) on low volume, significantly underperforming the Nasdaq 100 (0.82%). Today's close at 359.60 marks the lowest recorded closing price since October 2nd. The bears were in full control today, moving the market lower throughout the whole session. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (AVGO as at Oct 27, 2020):
Tuesday's trading range has been $5.96 (1.63%), that's slightly below the last trading month's daily average range of $6.85. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for AVGO.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
The market closed below the 50-day moving average at 359.90 for the first time since April 21st. When this moving average was crossed below the last time on April 20th, AVGO lost -4.12% on the following trading day.
Although the share is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might accelerate should prices move below the nearby swing low at 357.61 where further sell stops could get activated. As prices are trading close to October's low at 356.15, downside momentum might speed up should Broadcom mark new lows for the month.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "3 Consecutive Lower Closes" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Broadcom. Out of 119 times, AVGO closed higher 60.50% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 58.82% with an average market move of 1.52%.