The bank holding company for Citizens Bank, National Association and Citizens Bank of Pennsylvania, Citizens Financial Group Inc. (NYSE: CFG) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Breakout: As you can see from the daily chart, the stock had been forming a falling wedge pattern during the past few months. This is marked as purple color lines. The stock has currently broken out of the falling wedge pattern. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
Daily Chart – CFG
#2 MACD above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
[hana-code-insert name=’adsense-article’ /] #3 Bullish Stoch: The %K line is currently above the %D line on the stochastic.This indicates possible bullishness.
#4 RSI Strong: Relative strength index (RSI) is currently above 50 after moving up from oversold levels. This indicates the strength of the current upmove.
#5 Flag Pattern Breakout: As seen from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrowing range.
This is a classic flag pattern and is marked in the chart in purple color. A flag is a continuation pattern. Whenever a stock breaks out of this pattern, it typically continues its previous trend (uptrend in this case). Currently, the stock has broken out of the flag pattern. This is a possible sign of an upcoming bullish move.
Weekly Chart – CFG
#6: Bullish CCI: In the weekly chart, CCI is moving up from oversold levels. This is a bullish sign.
#7 Rising Stochastic: The %K line has crossed above the %D line. The stochastic is also moving up from below 20. All this indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase half the intended quantity of shares of CFG at the current price of $40.69 and the rest once the stock closes above the resistance level of $43.
TP: Our target prices are $48 and $58 in the next 3-6 months.
SL: To limit risk, place a stop loss at $38.80. Note that the stop loss is on a closing basis.
Our target potential upside is 18% to 43% in the next 3-6 months.
- Entry at $40.69: For a risk of $1.89, our target rewards are $7.31 and $17.31. This is a nearly 1:4 and 1:9 risk-reward trade.
- Entry at $43: For a risk of $4.20, our target reward (TP#2) is $15. This is a nearly 1:4 risk-reward trade.
In other words, this trade offers 4x to 9x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern with high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
Tara
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