On its daily time frame, it’s clear that Citigroup shares have been moving sideways for the most part of the year. Price has found support around the $46.00-$46.50/share level and resistance at the $50.00-50.50/share area.
Right now, Citigroup shares are making a strong climb towards the top of the range and ready to test resistance. MACD is already in the overbought zone, indicating that buyers are exhausted and that price might turn down soon. Take note though that share prices have moved past the 200 SMA (simple moving average), which suggests a potential uptrend.
The 50 SMA is moving below the 200 SMA though, indicating that the longer-term downtrend is intact or that price might keep moving sideways for quite some time.
Citigroup Shares Outlook
If the resistance holds, Citigroup shares could fall back to the middle of the range around the $52/share levels. Further selling pressure could take prices back to the range support at $46.00.
However, a strong pickup in buying momentum could lead to a resistance break, pending any company updates that could affect Citigroup shares trading. Bear in mind that the company recently paid $7 billion to settle with the US DOJ in allegations for civil fraud.
Aside from that, Citi is required to finance affordable housing developed through the Low Income Housing Tax Credit. The company is also set to dedicate $2.5 billion to “consumer relief” and might lead to price weakness among its shares.
With that, the bottom of the range could soon break if price makes a convincing close below the $46.00/share level. Take note that the range is approximately 400 points in height, which means that the resulting breakdown could be of the same size. In that case, Citigroup shares could go below $42.00 if the recent settlement winds up weighing on the company’s valuation.
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