Stock of the day: British American Tobacco

In today’s analysis, we’re circling back to British American Tobacco (BATS), which we previously analysed on January 12^th. This instrument is a frequent guest on our portal. This analysis you’re reading right now is the fifth one we’ve done on BATS so far.

The last time we analysed BATS we were bullish and back then, the price was around 29 GBP. This is how we explained our bullish sentiment:

“With the price escaping from the triangle to the upside, we do have a clear buy signal here. The positive sentiment will be cancelled when the price comes back to the triangle but chances for that are now limited.”

It was a great call. Since then, we’ve only had bullish weeks and the price climbed to the 34 GBP mark.

That was it though. In February, BATS recorded a reversal, which removed around 50% of the recent gains. What’s going to happen now?

BATS is currently on a very important support. This is the area around 29 GBP, which was the top in 2021 and at the end of 2020 (yellow). This has potential to stop the reversal, at least for a while. The current price seems attractive and if the external sentiment allows for it, it can be a good starting point for a bullish reversal.

I think that as long as the price stays above the yellow area, we can see a buy signal here. The price closing a week below would be an invitation to go short.