[JSE:BTI] British American Tobacco

"Lighting Up" - Technical Take

Direction: Long (BUY)

Entry: 87600c

Stop: Loss: 85000c

Take Profit: 92000c

Volatility remains the only constant on the local market, providing fertile conditions for short term traders.  This week I am going to look at a household name that has stood the test of time. BTI has been trading in a well-defined range since it broke higher in April of this year (as shown on the chart below).  This mega cigarette producer has been on the acquisition trail and has finally completed the purchase of Reynolds in the USA, which will make it one of the largest cigarette producers in the USA. As depicted below the share has bounced off the support line at 88000c and has traded to as much as 92000c in the same move on numerous occasions. There is a support line from December 2016(the blue line), I anticipate the share will retest this line, aggressive buyers can enter half of their position here at 88600c.  If this support breaks the share could test the bottom of the channel at 88000c, which would be the ideal entry point.  I have placed a stop loss at 85000c the dotted red line, as there is an opening gap that could be filled on a move lower.

Source: Bloomberg 2017

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