Technical Analysis: Citigroup (C)

Last week, I strategically entered Citigroup at $76.15, identifying a strong support level and a bullish crossover in the moving averages. The 5-day EMA trending above the 10-day and 20-day EMAs indicated a short-term bullish momentum. Additionally, the Bollinger Bands showed a narrowing channel prior to the breakout, hinting at increased volatility ahead.

By observing the price action, I noticed a strong upward momentum towards $81.50, approaching the upper Bollinger Band limit and previous resistance levels. This represented a gain of approximately 7.5%. Selling at $81.50 was a calculated move to lock in profits, especially with the stock showing signs of nearing an overbought condition, as suggested by the extended candlesticks above the EMAs.

Dividend Tax Consideration

Another key factor was the upcoming dividend. While dividends can be lucrative, the 30% tax deduction on foreign dividends would significantly reduce my net income. By exiting at a peak price, I effectively maximized capital gains while avoiding dividend-related tax implications.

This trade exemplifies how technical analysis, combined with strategic timing and tax considerations, can yield profitable outcomes. While Citigroup remains a strong company, my decision was driven by short-term profit-taking and tax efficiency.

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