Stock of the day: British American Tobacco

In today’s piece we will talk about British American Tobacco (BAT), a company from the same industry as Philip Morris, which we mentioned on the 19^th of August. We had rather good news for Philip Morris investors. Unfortunately, we cannot give the same kind of news for BAT investors. We are writing this piece because indeed we see a good trading occasion but, in this case, to sell.

Our negative sentiment, comes from the fact, that several days ago, the price broke the lower line of the symmetric triangle pattern (blue). The price dropped and then in the middle of August, we saw a correction attempt. This rise quickly stopped and the bullish plan failed. The price managed to create a shooting star on the daily chart (yellow), which is present on the horizontal support (purple) and can only mean trouble.

As long as the price stays below the purple area, the sentiment is negative. The potential target for the current drop is on the red line, which is recently connecting, the most important lows. The chance for the price to get there is pretty high.