Citigroup Stock Testing Resistance After Upbeat Quarter

Citigroup Inc. (C) stock was trading marginally higher in Monday's pre-market session after the banking giant beat first quarter earnings per share (EPS) estimates by eight cents and met revenue expectations at $18.58 billion. A 1.6% decline in year-over-year revenues and a steep downturn in equity income marred the otherwise benign confessional, keeping committed buyers on the sidelines into the opening bell.

The financial behemoth carved a strong recovery wave off December's two-year low in the upper $40s in January and stalled at resistance in the mid-$60s, generated by the 200-day exponential moving average (EMA) and fourth quarter breakdown through the second quarter low at $64.38. It mounted that barrier by a few points ahead of the news but could easily turn tail if buying power fails to pick up during the regular session.

C Long-Term Chart (1987 – 2019)

Long-term chart showing the share price performance of Citigroup Inc. (C)
TradingView.com

Citigroup stock broke out above 1987 resistance at a split-adjusted $26.96 in 1992, entering a historic uptrend that posted seven splits into the July 2000 high at $551.48. That marked the highest high for the next six years, ahead of a steep downturn that found support at $228.32 in July 2002. It bounced within 30 points of the prior peak in 2004 and eased into a trading range that persisted into a January 2007 breakout.

Bulls failed to support the breakout, which added less than 20 points into the all-time high at $570.00. A June rally attempt also failed, yielding a modest pullback that accelerated into a full-blown selling panic during the 2008 economic collapse. Steep downside finally ended in March 2009 after the stock undercut the 1987 low at $13.60 by 10 cents, giving way to a strong bounce that stalled in the mid-$50s in August.

That high marked resistance for the next six years as well, giving way to a secondary decline that ended in August 2011 in the mid-$20s, three months after a one-for-ten reverse split severely diluted remaining shares. It tested that level successfully in 2012 and completed a double bottom reversal, setting the stage for a strong bounce that failed near 2009 resistance in 2013. Breakout attempts in 2014 and 2015 also failed, reinforcing range resistance in the $50s.

A sell-off into early 2016 posted the third higher low off 2009's historic low, yielding a steady uptick that finally mounted resistance in December 2016. It based above new support into June 2017 and took off on a healthy advance that continued into January 2018's nine-year high at $80.70. Sellers took control through the rest of the year, carving a multi-wave correction that ended at 10-year channel support (black lines) in December.

C Short-Term Chart (2016 – 2019)

Short-term chart showing the share price performance of Citigroup Inc. (C)
TradingView.com

A Fibonacci grid stretched across the 2018 downtrend places the bounce into January at the 50% retracement level, while the April breakout stalled at the .618 retracement. A rally above $68 would favor continued upside into the September high at $75.24, while a decline through first quarter range support at the .386 retracement near $60 would incur technical damage, favoring continued downside that tests last year's deep low.

The on-balance volume (OBV) accumulation-distribution indicator predicts that buying power will stall badly in coming months. A long-term accumulation phase ended in May 2013, marking the first point of a red trendline that has tracked three lower highs in the past six years. A second quarter rally is likely to reach that resistance level once again, signaling an intermediate or long-term top, well before the stock completes a round trip into the 2018 high.

The Bottom Line

Citigroup stock was trading near resistance at $68 ahead of Monday's opening bell, exhibiting modest buying interest, and it needs to clear this contested level to generate more potent upside.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Service
Name
Description