Strong NFP (Non-Farm Payrolls) report raises pretty much the chance that the Federal Reserve in the United States will start raising the interest rates this year.
The unemployment rate also fell well below the 5.7% mark, and this is adding fuel to the higher interest rates fire. However, what are the sectors to benefit the most out of a Fed hike?
This brings us to Citigroup (NYSE: C), one of the biggest financial corporations in the world. A quick look at share price evolution in the last few years brings a double bottom formation around 2012 when prices were hovering around the $25/share level.
In the meantime, the measured move generated by the double bottom is already completed but we should all keep in mind that this pattern is a reversal pattern and the measured move is only there to have a target.
Since April 2013, the price is moving into the $45-$55 area, with strong support at the bottom of it and great resistance at $55. Something’s gotta give and my case here is on the bullish side as again, interest rate hikes should be positive for financial stocks.
The current area seems to be resembling a bullish triangle market, as we have a series of higher highs and lower highs as well. Therefore more continuation should be expected with call options by the time the $55.5 is reached. Choose an end of the week expiration date if the level comes in at the first half of the month, and end of the month expiration date if it comes in in the second half.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
