Citigroup Inc. stock climbed to 60.90 on July 23rd, 2015, but investors who bought near that level are probably banging their heads. Prices have been steadily declining ever since, falling to as low as 34.49 on February 11th, 2016. Currently at 41.11, we are wondering if the slump is over and is it safe to buy now. Let’s see if the Elliott Wave Principle could help us find the answer.
The daily chart of Citigroup stock is shown above. It makes the whole decline since 60.90 visible and therefore susceptible to analysis. It looks like the reign of the bears is not over yet.
Trends move in repetitive pattern, called waves. Waves, in turn, form larger patterns. A sequence of five waves is called an impulse, while three-wave patterns are “corrections”. After every correction, the larger trend resumes in the direction of the impulsive pattern.
Having that in mind, take a look at Citigroup’s chart again. There is one impulse from 60.90 to 47.67, labeled (1). Every impulse is followed by a correction, moving against it. On the chart, that is wave (2). It is interesting to notice how accurately the 61.8% Fibonacci level forced the bulls to make way for the bears again. According to this wave count, Citigroup is now in its wave (3) down, which appears to be still under construction, since its fifth wave – 5 – is missing. If this is the correct outlook, we should expect more weakness towards 34.00 from now on. So, in our opinion, it is too early to go long in Citigroup again.
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