Citigroup: How The Bullish Channel Might Play Out

Mar. 17, 2017 3:23 AM ETCitigroup Inc. (C)KBE, XLF4 Comments
Chris B Murphy profile picture
Chris B Murphy
3.66K Followers

Summary

  • Citigroup Inc. is trading in a bullish channel that puts resistance at $64.50 (mid-term) and $67.80 for the top of the channel.
  • Citigroup broke out of a 4.5% range and has traveled the length of that range. The next range is currently taking shape.
  • If Citigroup stays within the bullish channel, the stock could retrace as low as $59.40 and bounce possibly as high as $67.80 while remaining in its bullish trend.

There have been many factors driving banks stocks lately including higher yields, the expectation of economic growth, resulting in better earnings, and the possible watering-down of the Dodd-Frank Act.

Thanks to President Trump, since November, we've seen a bump in bank stocks like those listed in the SPDR S&P Bank ETF (NYSEARCA:KBE), the Financial Select Sector SPDR ETF (NYSEARCA:XLF), and Citigroup Inc (NYSE:C).

Although the fundamentals are driving financial stocks, in this analysis we'll look at key price levels and the channel in which Citigroup is currently trading within. With the recent gains, it's important to have a risk management strategy in place in case the market turns south. And it's at these key levels that sell and buy orders may kick-in exacerbating the move.

In full disclosure, this analysis is not a recommendation to buy or sell at a specific level. I'm not a financial advisor. My goal is to help you identify areas of risk in your portfolio, identify areas of resistance and support, and areas where volatility is likely to rise.

Analysis of Citigroup range breaks:

  • Citigroup got stuck in a 4.5% range twice; from November to December, and from Mid-January to mid-February of this year. A break of a range (or range-break) can sometimes, (not always) propel the stock to travel the length of the range.
  • Following the two range-breaks, Citi moved higher by at least 4.5%.
  • With each move higher, Citigroup came up against resistance. This resistance is the bullish channel that Citi is currently trading within.

  • The trendlines represent the bullish channel; the bottom pink trendline connects the lows of the move higher while the top blue trendline connects the highs of the move.
  • The red line represents the medium-term resistance.

How I drew the line: I took the trendline from the lows, and "cloned" it (so to

This article was written by

Chris B Murphy profile picture
3.66K Followers
Hello. I'm a financial writer/blogger & market risk analyst with 15 years in the financial services industry including over 10 years on trading desks of two major banks. --------------------------------------------------------------------------------------------------------------------- My Top-Down meets Bottom-Up Approach to financial analysis includes: ----------------------------------------------------------------------------------------- How Macro Trends & Economic Indicators, Bond yields, Capital flows, & The Fed - Drive Sectors & ultimately Individual Stocks. - Financial analysis of Bank stocks, Commodities, Industrials, & Tech. - Former currency risk advisor to Corporates, with Options and risk policy experience.- Published Work includes: Financial analysis (Investopedia); - Retirement Income (RetirementIncomeAnalyst.com) & Wealth Management Firms. - Hold an Economics degree with a concentration in Finance (University of Rhode Island).

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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