RingCentral (RNG) is expected to report earnings today (Tuesday) after the market closes. The report will be for the fiscal quarter ending Dec 2020. Jim Cramer told his Mad Money viewers Friday night that RNG is on his short list of companies he's watching this week. I have no special knowledge of the company's numbers so let's check out the charts and technical indicators.
We looked at RNG on December 16 and wrote that "RNG has beautiful and bullish longer-term charts, but in the very short-run we could see RNG pull back to retest the upper end of its long consolidation pattern. Investors should consider a correction to the $315 area as a buying opportunity."
RNG did pull back into late January but not as deep as we anticipated. Now what?
In this updated daily bar chart of RNG, below, we can see that prices have been strong since they broke out of a seven month consolidation period at the end of November. RNG is trading above the rising 50-day moving average line and the rising 200-day moving average line.
The On-Balance-Volume shows strength from November but in recent days has not confirmed the new price highs on RNG.
The 12-day price momentum study shows a high in December and probably an equal high being made this month. Higher highs in price but equal highs in momentum is one category of bearish divergence and should put us on alert to watch prices closer.
In this weekly bar chart of RNG, below, we see a mixed picture. Prices have done very nicely the past three years and have rewarded patient buy and hold investors. Prices are trading above the rising 40-week moving average line but not extended nor overbought. The trading volume has been diminishing the past 12 months and that is not the picture of health as volume should increase in the direction of the trend.
The OBV line shows a positive trend the past three years. The 12-week price momentum study in the lower panel shows that momentum has been strong but it is also likely to be close to a peak. This needs to be watched like the daily indicator of momentum.
In this daily Point and Figure chart of RNG, below, we can see that the software is projecting a possible price target in the $490 area.
Bottom line strategy: Traders who may be long RNG should raise or enter sell stop protection at $405 now. A near-term rally towards $490 should be considered for some profit taking.