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Bullish MACD Crossover Drives Citigroup Higher

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Bullish MACD Crossover Drives Citigroup Higher

Despite the confusion over whether the Federal Reserve plans on increasing interest rates soon than the market expected, action will not likely come until the Q2 or Q3 of 2015, which is well in the distance. Financial performed well as the interest rate curve flattened, which was beneficial to large cap financial stocks such as Citigroup (NYSE:C) .

Yellens comments were parsed by Fed watchers which drove short term interest rates higher. The FOMC, in its statement said that there would be a considerable period between the completion of the asset purchases and the first increase in rates. When asked what considerable period meant Yellen responded by saying around 6-months. To market participants, this meant that 6-months after the bond purchase program ended, rates would increase. This news pushed short and long term yields higher, and in turn flattened the interest rate curve.

Citigroup gained in the latter part of Wednesday trading session, and seems to be poised to test resistance near the 50-day moving average at 49.70. Momentum on the financial giant is positive as the MACD (moving average convergence divergence) index generated a buy signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crossed above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.

Additionally, the relative strength index (RSI), an oscillator that measures overbought and oversold levels, moved higher with price action reflecting accelerating momentum while printing near 52, which is in the middle of the neutral range.

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