Picking a winning trade on a consistent basis is not simply a stroke of luck. It’s the result of calculated screening, planning, and deliberation.
With this in mind, we have started a new weekly series on our top 10 stocks to watch this week — stocks that look poised for a possible breakout in the coming days. Traders should add these stocks to their watchlist now.
The Top 10 Stocks to Watch This Week for Possible Breakouts
| Sl # | Name of the Stock | Stock Ticker | Last Close | Buy Level(s) | Reason |
| 1 | Embraer S.A. | NYSE: ERJ | $15.75 | $17.00 | Symmetrical Triangle Pattern Breakout |
| 2 | Teradata Corporation | NYSE: TDC | $55.13 | $56.00 | Ascending Triangle Pattern |
| 3 | The Walt Disney Company | NYSE: DIS | $181.08 | $190.00 | Downtrend Channel |
| 4 | Bluescape Opportunities Acquisition Corp. | NYSE: BOAC | $9.77 | $10.00 | Consolidation Area |
| 5 | eBay Inc. | NASDAQ: EBAY | $74.02 | $75.00 | Uptrend Channel |
| 6 | Pretium Resources Inc. | NYSE: PVG | $9.85 | $10.30 | Downtrend Channel |
| 7 | DoorDash, Inc. | NYSE: DASH | $194.79 | $215.20 | Symmetrical Triangle Pattern |
| 8 | The ExOne Company | NASDAQ: XONE | $24.24 | $27.10 | Falling Wedge Pattern Breakout |
| 9 | Conduent Incorporated | NASDAQ: CNDT | $7.37 | $8.30 | Flag Pattern Breakout |
| 10 | Tyson Foods, Inc. | NYSE: TSN | $81.91 | $84.50 | Uptrend Channel |
Important: Typically, these trades offer a risk: reward ratio of 1:2 or 1:3 in the next 6 months, which implies 2x to 3x rewards when compared to risks. So, be sure to set your stop-loss levels and target prices accordingly to manage your risk. In addition, these trade ideas are triggered using daily closing prices, not intra-day pricing. So, if you participate in these trades, make sure that you only buy the stock once its daily close is above the recommended price level.
That said, here are the top 10 stocks to watch for a breakout, in no particular order.
#1 Embraer S.A. (NYSE: ERJ)
Sector: Industrials | Aerospace & Defense
Reason: Symmetrical Triangle Pattern Breakout
A symmetrical triangle is a chart pattern formed by two converging trend lines connecting a series of sequential peaks and troughs. These two lines result in the formation of a triangle that appears to be symmetrical.
A symmetrical triangle pattern is usually formed when there is an indecision in the price movements and there is uncertainty among the buyers and sellers. This chart pattern represents a period of consolidation before the price breaks out or breaks down. In case a breakout occurs from the upper trend line, it is a strong bullish indication as it signifies the start of a new bullish trend.
Buy Level(s): The stock has currently broken out of a symmetrical triangle pattern. However, the ideal buy level for ERJ is if the stock closes above the immediate resistance level of $17.00. This is marked in the chart below as a green color dotted line.
Daily chart – ERJ
ERJ – Symmetrical Triangle Pattern Breakout
#2 Teradata Corporation (NYSE: TDC)
Sector: Technology | Information Technology Services
Reason: Formation of an Ascending Triangle Pattern
An ascending triangle pattern is a bullish pattern formed by drawing a horizontal line along the swing highs, and a rising trendline along the swing lows. These two lines result in the formation of a triangle. A breakout from this pattern is typically a strong bullish indication.
Buy Level(s): The ideal buy level for TDC is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $56.00. This is marked in the chart below as a green color dotted line.
Daily chart – TDC
TDC – Ascending Triangle Pattern
#3 The Walt Disney Company (NYSE: DIS)
Sector: Communication Services | Entertainment
Reason: Formation of a Downtrend Channel
A downtrend or descending channel is the price action contained between downward sloping parallel lines. It is formed by two lines that are drawn by connecting the lower highs and lower lows of a stock’s price. Even though this is typically a bearish pattern, a breakout from the upper rail of this pattern is considered a good bullish indication.
Buy Level(s): The ideal buy level for DIS is if the stock has a daily close above the breakout level of the downtrend channel, at around $190.00. This is marked in the chart below as a green color dotted line.
Daily chart – DIS
DIS – Downtrend Channel
#4 Bluescape Opportunities Acquisition Corp. (NYSE: BOAC)
Sector: Financial | Shell Companies
Reason: Formation of a Consolidation Area
A Consolidation Area is a price action contained between two parallel lines. It is formed by a lower line that connects the lows, and an upper line that joins the highs. A stock usually trades between the two lines of the consolidation area before finally breaking out from the upper rail.
Buy Level(s): The ideal buy level for BOAC is if the stock has a daily close above the breakout level of the consolidation area, at around $10.00. This is marked in the chart below as a green color dotted line.
Daily chart – BOAC
BOAC – Consolidation Area
#5 eBay Inc. (NASDAQ: EBAY)
Sector: Consumer Cyclical | Internet Retail
Reason: Formation of an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The ideal buy level for EBAY is if the stock has a daily close above the near-term resistance level of $75.00 within the uptrend channel. This is marked in the chart below as a green color dotted line.
Daily chart – EBAY
EBAY – Uptrend Channel
#6 Pretium Resources Inc. (NYSE: PVG)
Sector: Basic Materials | Gold
Reason: Formation of a Downtrend Channel
A downtrend or descending channel is the price action contained between downward sloping parallel lines. It is formed by two lines that are drawn by connecting the lower highs and lower lows of a stock’s price. Even though this is typically a bearish pattern, a breakout from the upper rail of this pattern is considered a good bullish indication.
Buy Level(s): The ideal buy level for PVG is if the stock has a daily close above the breakout level of the downtrend channel, at around $10.30. This is marked in the chart below as a green color dotted line.
Daily chart – PVG
PVG – Downtrend Channel
#7 DoorDash, Inc. (NYSE: DASH)
Sector: Communication Services | Internet Content & Information
Reason: Formation of a Symmetrical Triangle Pattern
A symmetrical triangle is a chart pattern formed by two converging trend lines connecting a series of sequential peaks and troughs. These two lines result in the formation of a triangle that appears to be symmetrical.
A symmetrical triangle pattern is usually formed when there is an indecision in the price movements and there is uncertainty among the buyers and sellers. This chart pattern represents a period of consolidation before the price breaks out or breaks down. In case a breakout occurs from the upper trend line, it is a strong bullish indication as it signifies the start of a new bullish trend.
Buy Level(s): The ideal buy level for DASH is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $215.20. This is marked in the chart below as a green color dotted line.
Daily chart – DASH
DASH – Symmetrical Triangle Pattern
#8 The ExOne Company (NASDAQ: XONE)
Sector: Industrials | Specialty Industrial Machinery
Reason: Breakout From a Falling Wedge Pattern
A falling wedge pattern is formed by joining two downward-sloping, converging trendlines having a contracting range. The pattern appears to be wide at the top and continues to contract as prices fall. A breakout from a falling wedge pattern can indicate either reversal or continuation depending on where the pattern appeared in the trend.
A stock that has broken out of a falling wedge pattern would have gained momentum and would have the potential to move higher.
Buy Level(s): Even though the stock has broken out of a falling wedge pattern, the ideal buy level for XONE is above the immediate resistance level of $27.10. This is marked in the chart below as a green color dotted line.
Daily chart – XONE
XONE – Falling Wedge Pattern Breakout
#9 Conduent Incorporated (NASDAQ: CNDT)
Sector: Technology | Information Technology Services
Reason: Breakout From a Flag Pattern
A flag pattern is a short-term continuation pattern that marks a small consolidation before the previous move resumes. The pattern is formed when the market consolidates in a narrow range after a sharp move. For a stock in an uptrend, a breakout from this pattern is typically a strong bullish indication.
Buy Level(s): Although the stock has currently broken out of the flag pattern, the ideal buy level for CNDT is above the near-term resistance level of $8.30. This is marked in the chart below as a green color dotted line.
Daily chart – CNDT
CNDT – Flag Pattern Breakout
#10 Tyson Foods, Inc. (NYSE: TSN)
Sector: Consumer Defensive | Farm Products
Reason: Formation of an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The ideal buy level for TSN is if the stock has a daily close above the near-term resistance level of $84.50 within the uptrend channel. This is marked in the chart below as a green color dotted line.
Daily chart – TSN
TSN Uptrend Channel
Happy Trading!
Trades of The Day Research Team
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