An inverse head and shoulders pattern can be seen on the 4-hour and 1-hour charts of Citigroup shares, indicating that the downtrend might be over. However this could just put the stock on a major correction to the next resistance levels.
Using the Fib tool on the latest swing high and low shows the potential ceilings for Citigroup shares even if it manages to break above the neckline resistance of the reversal pattern, which is near the 38.2% Fib. A move past that area could lead to a rally up to $44.20 near the 50% Fib and onto $46.50 near the 61.8% Fib.
A larger correction could lead to a test of the descending trend line connecting the latest highs of price action, which also near the 200 SMA dynamic resistance. Speaking of moving averages, the 100 SMA is below the 200 SMA and is edging farther so bearish pressure is in play.
In addition, stochastic is nearing the overbought area so sellers might still take over. RSI is moving up but is almost overbought as well. Once the downtrend resumes, a test of the previous lows at $35 could be possible.
Reports that Citigroup received a downgrade from Atlantic Equities could weigh on Citigroup shares, as the agency noted the bank’s large exposure to US oil companies which are suffering in terms of profitability.
A rebound in crude oil could then lift Citigroup shares while a continued selloff could weigh on stock prices. Leaders of OPEC and non-OPEC nations are still unable to come up with a deal to freeze output so far.
Citigroup recently sold its minority stake in Chinese regional lender China Guangfa Bank (CGB) for about $3 billion, helping the bank free up much-needed capital.
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