Sentiment has turned positive for Citigroup, as well as the banking sector overall, Royce Tostrams, technical analyst at Tostrams Groep, told CNBC on Friday.
"The falling trend channel which started in 2007 is slowly ending," Tostrams said.
The company's stock has formed three lows in December, January and February, which suggests that there's a "strong support level unfolding," he added.
"After breaking above the February high which lies at $3.70, it has triggered a short-term buy signal," he said.
Tostrams' first target for the financial is $4.31. If it breaks above that, its next target is $5.50, he said.
"Upside for the short-term is limited because Citi has risen nearly 20 percent this week. So only buying on dips should be rewarding," Tostrams warned. "So don't buy the market too soon."
On Thursday, Citi's Chief Executive Vikram Pandit told investors that the bank is on track to return to sustained profitability, and that losses from some of its worst assets should be manageable if the economy does not deteriorate.
The outlook for the European banking sector has also become more positive, according to Tostrams.
"The European banking sector has also come out of its falling trend," he said. "The sentiment in the European banking sector is improving."
His first target for the European Banking Sector Index is 211 and his second target is 235, "which is another 10-12 percent upside potential," he added.
Tostrams is positive on Dutch bank ING. He gives CNBC a major target of 9.81 euros ($13.42) for the company.
"There's a lot of upside potential. Short-term technicals are bullish," he said.