British American Tobacco Set to Light It Up

 | Mar 21, 2017 | 10:52 AM EDT
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Stock quotes in this article:

mo

,

pm

,

bti

In the U.S. we know Altria (MO) and Philip Morris International (PM) but in Europe British American Tobacco  (BTI) is probably the name associated with the tobacco industry.

Let's check on the charts and indicators for the ADRs of British American Tobacco.

In this daily chart, below, we can see that BTI suffered a two-month decline in October and November but it has recovered very nicely over the past five months. In December, BTI closed back above the 50-day moving average line and the slope of the line turned up in January. By the end of January BTI had risen above the now-rising 200-day moving average line. Earlier this month the 50-day average line closed above the 200-day line for a bullish golden cross. 

The On-Balance-Volume (OBV) line was mostly neutral from October to January and then it climbed sharply signaling very aggressive buying and accumulation. The trend-following Moving Average Convergence Divergence (MACD) oscillator has been in bullish territory or above the zero line since late December and is poised to cross to a fresh outright buy signal.

In this weekly chart of BTI we went back five years to 2012 to show the large upward sloping price channel. Prices are currently above the rising 40-week moving average line. The weekly OBV line was mostly flat for several years but recently exploded on the upside. The weekly MACD oscillator is rising and above the zero line -- a bullish configuration.

In this Point and Figure chart of BTI, below, we have selected a scaling of the price action by percentage moves instead of a fixed amount like $1. The trade at $63.50 is a breakout on this chart and allows us to have a price projection of $83 on the upside.

Bottom-line strategy: With a bullish breakout on our Point and Figure charts we want to go long BTI here and on any weakness under $64 if available. I would add to longs on a close above $65 risking a close below $62. Our price objective is $83.

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