Stock of the day: British American Tobacco

On Wednesday, we’re analysing British American Tobacco for the second time on this portal as we already mentioned this instrument on the 25^th of August. Back then, the price was 26,8 GBP and we were rather pessimistic about the nearest future. This is what we had to say about BAT last time:

“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.”

Today, we come back to this instrument because we are bearish again but the price is more or less on the same levels as before, so what happened?

Well, for the past few weeks, the price was having a bullish correction and went slightly higher. For some time, buyers even managed to climb above the purple resistance. Luckily for sellers, the main negative sentiment prevailed and the price came back to a downswing. We are refreshing our view on BAT because currently, the price is breaking the lower line of the flag, which in theory is a very strong sell signal. Especially, when we combine it with the fact that we are below the purple resistance, again.

With today’s price action, we look forward for a further drop towards the green line, which is the lower line of the symmetric triangle pattern. The recent global correction on stocks should help with that.