Technical Analysis: Buy Converge (CNVRG) Below 26 or Above 28?

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Technical Analysis: Buy Converge (CNVRG) Below 26 or Above 28?

As of 11:32am of August 12, 2021, Converge ICT Solutions, Inc. (PSE:CNVRG) is trading at P26.75 per share, down by 2.38 percent, with a total turnover value of P186 million. The local investors are the main drivers of trading CNVRG, while the foreign investors have registered a net selling worth P47.50 million.

The foreign investors’ buying stance in the first week of August 2021 was, by far, the best trading week of 2021 for CNVRG in terms of net foreign buying. I find that self-explanatory because I believe institutional investors already knew the addition of CNVRG in the Philippine Stock Exchange Index (PSEi) weeks, if not months, before it was officially announced, especially those who have subscriptions to the premium reports of MSCI, Inc.

Converge ICT Solutions (CNVRG) Analysis - Daily Chart EOD - 8.12.2021

As far as how CNVRG’s chart looks like today, I prefer to rely on the Fibonacci retracement lines instead of using the classical horizontal lines in plotting the stock’s support and resistance levels. Its immediate resistance is between P28.20 and P28.30, while its immediate support is between P26.15 and P26.20. The support is confluent with the golden ratio, which is the 61.80 percent Fibonacci retracement. As long as its share price stays above P26.15-P26.20, it’ll be less likely for CNVRG to fill that gap you see at the bottom.

I don’t see a pressing concern on CNVRG’s daily volume. Its MACD is also bullish, and I don’t see a formation of a bearish convergence between the MACD and its signal line.

However, CNVRG already entered the moderate risk territory due to its 10-day historical volatility score of 66 percent.

Dominant Range Index: BEARISH
Last Price: 26.85
VWAP: 26.91
Dominant Range: 26.85 – 27

Converge ICT Solutions (CNVRG) Analysis - Dominant Range Index EOD - 8.12.2021

Market Sentiment Index: BULLISH
38 of the 65 participating brokers, or 58.46% of all participants, registered a positive Net Amount
36 of the 64 participating brokers, or 56.25% of all participants, registered a higher Buying Average than Selling Average
65 Participating Brokers’ Buying Average: ₱26.90994
65 Participating Brokers’ Selling Average: ₱26.95738
20 out of 65 participants, or 30.77% of all participants, registered a 100% BUYING activity
7 out of 65 participants, or 10.77% of all participants, registered a 100% SELLING activity

Converge ICT Solutions (CNVRG) Analysis - Market Sentiment Index EOD - 8.12.2021

Verdict

Converge ICT Solutions (CNVRG) failed to bag a confirmed buy signal as of the time of writing this analysis because 2 of the 7 technical signals of my proprietary algorithm raised a bearish rating.

Recommendations

Do you already have Converge in your stock portfolio? If yes, the next question is, is your trailing stop intact? If yes, you have the option to hold your position. I don’t see the need to reduce the risk percentage on your trailing stop because CNVRG’s Market Sentiment Index is still bullish.

You don’t have Converge yet, but you’re planning to buy shares? If you see your investment psychology in mine, you may want to wait for its Dominant Range Index to turn bullish. Suppose you’re one of our clients at Equilyst Analytics. In that case, I highly recommend that you check the Stock Screener tab by the end of the day so you’ll see our latest recommendation not only for Converge but also for all actively traded stocks in the Philippine Stock Exchange. We also have a private forum where you can ask questions.

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