AVGO Threw a Party and Forgot the Guests 🚀 AVGO Threw a Party and Forgot the Guests 🚨
Hello team,
We are going to dive into one of the deepest and most counterintuitive secrets of technical analysis.
The sacred relationship between price and volume.
This connection is not just a metric, it is the voice of the market. And sometimes, it screams a warning at us just when we think everything is rosy.
📉 The Deception of the All-Time High with Low Volume
Look closely at the image accompanying us. Observe that All-Time High (ATH), the peak of the mountain, marked with the phrase, ATH with the LOWEST volume.
What does this mean?
Think of a party.
An ATH is the biggest party, the most anticipated event. If the price rises to a new peak (the ATH), but the volume (the number of people trading, the "guests") is the lowest we have seen in a long time, what does it tell us?
Lack of Wholesaler Conviction: There is not enough enthusiasm and participation from the big players, the Smart Money, to validate that movement. Few people wanted to buy.
An ATH with low volume is often an alarm signal, the rise is fueled by the optimism of a few, not by the collective power of the masses.
✅ The High-Volume Drop
Now, look at what happens right after. The price drops, and look at the volume bar, it's huge!
Here is the key lesson:
If a low-volume rally is dangerous, a HIGH-VOLUME drop is often the process that cleanses and resets the market.
All that volume is the result of the capitulation (panic and selling) of late buyers and the profit-taking of those who bought lower.
This strong, voluminous drop flushes out the weakness in the market. It is redistributing assets, moving from weak hands (those selling out of fear) to strong hands (those buying for the long term in value zones). This, paradoxically, can be the prelude to a healthier base.
🎯 The Strategy: Support and Accumulation Zones
Now, let's talk about strategy, because in trading, it's not just about understanding, but about acting!
Observing the chart, we see the importance of key support zones . A critical area to defend is the $325 mark.
If the $325 support fails, It is our signal that the market has decided to continue its correction . The next natural and highly interesting target, where volume accumulates significantly again, is around $250.
This $250 area is a volume accumulation level (the histogram on the right side confirms it). High prior volume at a price level indicates that a major battle occurred there, and therefore, it is a very strong support/resistance zone.
⚔️ My Battle Plan
Enter short only if the price breaks and confirms the loss of the $325 area. This would give us an impulse trade with a clear target in the $250 zone, an area where historical demand has proven to be strong.
🎯 Take Profit: $250 | > 20% Potential
🛡️ Stop Loss: $342 Zone (Above the breakout) | ~ 5% Risk
⚖️ Risk/Reward: 4:1 Ratio
We could also anticipate a bounce at the $325 support, aiming for a new wave back to All-Time Highs. However, the volume pattern suggests we should be cautious. A dynamic strategy here would be to attempt the long position, but remain agile: if the $325 support breaks, honor your stop loss and immediately flip the position to join the short movement. This ability to pivot is a common and powerful tool in the market.
🎁 Let’s make a simple deal.
I will handle the heavy lifting to find the top 1% of setups like this, and you just HIT the 🚀 Rocket, Follow and Enjoy.
🤝 Deal?
