Figure 1: Weekly chart of Citigroup.
On the weekly chart we have Citigroup (C) forming an 11-month ascending triangle. The volume on this pattern is nicely diminished from left to right. This is a reversal triangle although some might consider it a consolidation triangle. It has broken through the third fan line with an increase in volume, which coincides with the breakout from the triangle. There is the standard hesitation or throwback to the trendline as is often the case, and this is your buy in point. This confirmation on increased volume, which diminishes on the throwback and holds the trendline, is your signal that the equity is just taking a breather before lurching for new highs.
|Figure 2: Daily chart of Citigroup.|
|Graphic provided by: SuperCharts.|
|As is the case with many Dow components, these equities sometimes mirror the index itself, in particular the financials. As illustrated in the BKX Index chart there is a definite similarity between Citigroup, BKX and the Dow. Although, these aren't exact replicas, it is worth keeping an eye on when deciding to trade either of these equities or indices. As for the BKX, it looks ready to make all time highs above 977 since it gapped over the heavy resistance in the 900 areas. It is difficult to diagnose a gap without the use of volume as in the BKX Index, but it is my guess that this is a breakaway gap, which will propel the index higher.|
Figure 3: BKX Index.
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