Broadcom Stock Retreats After Soaring on OpenAI Deal—Monitor These Key Price Levels

Broadcom (AVGO) shares dropped Tuesday morning, giving back a portion of the big gains posted yesterday following news that the chip giant had forged a deal with ChatGPT maker OpenAI.

The company said it would collaborate with OpenAI on the development of artificial intelligence accelerator and network systems for delivery from 2026 to 2029. The announcement comes just a week after rival Advanced Micro Devices (AMD) inked a deal with the San Francisco-based AI start-up.

Broadcom shares were down nearly 4% at around $343 in recent trading, tracking a broader move lower for U.S. equities, after surging 10% on Monday. Investors have bid up the stock, which has risen about 50% since the start of the year, amid surging demand for custom AI chips as enterprises build out their AI capacity.

Below, we take a closer look at Broadcom’s chart and use technical analysis to identify key price levels worth watching out for.

Buying Momentum Has Accelerated

After hitting their all-time high last month, Broadcom shares retraced toward the 50-day moving average (MA) before attracting buying interest near the respected indicator.

Buying in the stock accelerated yesterday on the highest trading volume in over a month, a move that also coincided with the relative strength index (RSI) reclaiming the 50 threshold to signal a return of bullish price momentum.

Let’s point out two key overhead areas to watch on Broadcom’s chart and also identify important support levels worth monitoring during profit-taking episodes.

Key Overhead Areas to Watch

Buying from current levels could initially see a move up to around $374. Tactical traders who have bought the recent pullback may look to lock in profits in this location near the stock’s record high, especially if the RSI simultaneously moves into overbought territory.

If the shares enter price discovery mode, investors can forecast a possible overhead target to watch by using bars pattern analysis, a technique that analyzes prior price action to project future directional movements.

When applying the analysis to Broadcom’s chart, we take the uptrend from late August to early September and reposition it from last month’s low. This forecasts a bullish target of around $415, implying 16% upside from Monday’s closing price. We selected this prior move as it followed an earlier dip to the 50-day-MA in August, providing clues as to how a new trend higher from the indicator may take shape if price action rhymes.

Important Support Levels Worth Monitoring

The first support level worth monitoring sits around $324. This area on the chart could attract buying interest near the September and October lows, which currently closely align with the rising 50-day MA.

Finally, selling below this important level could spark a more significant drop to the $291 level. Investors could look to accumulate Broadcom shares in this region near a trendline that connects a range of corresponding trading activity on the chart between July and September.

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As of the date this article was written, the author does not own any of the above securities.