After closing the year of 2018 in the red, it looks like the British American Tobacco stock (LON: BATS) started picking up interest from investors again. From the end of January the share price reversed sharply to the upside and still continues to move in that direction. For now, we remain positive over the short-term outlook, as it seems that the stock may be set to make another higher high.
If we see a daily candle closing above the 2875 level, marked by yesterday’s high, this may attract even more attention from investors, as it could increase the chances for BATS to see more upside in the near term. This is when we will start examining the 3080 mark, as the next potential obstacle for the share price to reach. If that obstacle is only seen as a temporary stopping point, more buyers could continue pushing the stock further up, towards the 3170 barrier, which on October 16th, acted as a strong support zone and now it may take the role of a good resistance.
Our oscillators suggest that there might some more upside in the running. The RSI is above 50 and points higher. The MACD is above zero and fractionally above its trigger line, at the same time pointing a bit up. Of course, apart from all of the above, we see that there is a positive divergence, which also supports the above-discussed scenario.
Alternatively, if the price of BATS suddenly moves below the 2650 support zone, marked by the high of January 7th, that’s when we may see some more weakness coming in, which may drag the stock a bit lower. The share price may continue sliding towards the 2455 mark, a break of which could open the door for a further move lower, where the next possible support area might be found near the 2336 hurdle. This is the reversal point, from which the stock changed its direction, on January 28th and started moving upwards.
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