Broadcom Inc. (AVGO) had a rough Wednesday, with shares plunging after Reuters reported that Chinese regulators are telling domestic companies to stop using cybersecurity software from about a dozen American and Israeli firms. The reason? National security concerns, naturally.

Beijing Puts Foreign Security Tools on the Chopping Block

According to the Reuters report, Chinese authorities recently sent instructions to domestic firms ordering them to phase out software from several foreign cybersecurity vendors. The hit list includes some pretty big names from the U.S. side: Broadcom-owned VMware, Palo Alto Networks Inc. (PANW), and Fortinet Inc. (FTNT). Israel's Check Point Software Technologies Ltd. (CHKP) also made the cut.

The directive went out within the past few days, though it remains unclear exactly how many companies received it. Sources speaking to Reuters said officials are worried these software tools could potentially collect sensitive data or transmit it outside Chinese borders. Those sources requested anonymity given the delicate nature of the situation, which makes sense when you're discussing government cybersecurity directives.

This latest move is another chapter in the ongoing U.S.-China technology competition, playing out against a backdrop of escalating trade disputes and diplomatic friction. When superpowers compete for tech dominance, cybersecurity software becomes a particularly sensitive battlefield.

Where Broadcom Stands Technically After the Drop

Broadcom is currently trading below its key moving averages, which isn't exactly a bullish signal. The stock sits 1.6% below its 20-day simple moving average and 5.9% below its 50-day SMA. That positioning suggests some near-term weakness that traders should watch carefully.

The Relative Strength Index currently reads 50.76, landing squarely in neutral territory. This means Broadcom is neither overbought nor oversold right now, leaving momentum potentially open to swing either direction depending on what happens next.

There's a silver lining in the technical picture, though. The MACD remains above its signal line, indicating some underlying bullish momentum. If that strength persists, it could provide the fuel for another run at those moving averages.

Key technical levels to watch: support sits at $321.50, while resistance stands at $360.50. A test of support could signal either a reversal or continuation of the current downtrend, while breaking through resistance would indicate stronger upward movement ahead.

Worth noting: back in May, Broadcom experienced a golden cross when the 50-day SMA crossed above the 200-day SMA. That's typically a bullish signal for longer-term trends, suggesting the stock has potential for sustained upward momentum. However, the current positioning below shorter-term moving averages raises some concerns about near-term direction.

Despite Wednesday's selloff, Broadcom has delivered solid performance over the past year, gaining 50.48%. That strong showing reflects the stock's ability to recover from earlier lows and indicates continued investor interest, even with recent pullbacks.

The stock currently trades at 72.4% of its 52-week range, meaning it's closer to its highs than its lows. That positioning suggests the longer-term trend remains positive, though some short-term volatility may be in the cards.

Price Action: Broadcom shares were down 5.40% at $339.84 at the time of publication Wednesday.