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 | Airbnb, Inc. | NASDAQ: ABNB | $201.62 | $206.80 | Symmetrical Triangle Pattern Breakout |
| 2 | Royal Caribbean Cruises Ltd. | NYSE: RCL | $96.67 | $97.00 | Ascending Triangle Pattern |
| 3 | United Airlines Holdings, Inc. | NASDAQ: UAL | $52.71 | $53.00 | Symmetrical Triangle Pattern Breakout |
| 4 | Shake Shack Inc. | NYSE: SHAK | $90.97 | $91.50 | Falling Wedge Pattern Breakout |
| 5 | Carnival Corporation & plc | NYSE: CCL | $24.78 | $25.80 | Symmetrical Triangle Pattern |
| 6 | Endo International plc | NASDAQ: ENDP | $6.18 | $6.20 | Downtrend Channel Breakout |
| 7 | Norwegian Cruise Line Holdings Ltd. | NYSE: NCLH | $28.92 | $29.30 | Symmetrical Triangle Pattern Breakout |
| 8 | The Boeing Company | NYSE: BA | $224.46 | $232.80 | Downtrend Channel |
| 9 | BigCommerce Holdings, Inc. | NASDAQ: BIGC | $58.81 | $64.60 | Falling Wedge Pattern Breakout |
| 10 | Park Hotels & Resorts Inc. | NYSE: PK | $21.12 | $21.70 | Symmetrical Triangle Pattern Breakout |
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 Airbnb, Inc. (NASDAQ: ABNB)
Sector: Communication Services | Internet Content & Information
Reason: Breakout from 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 daily chart shows that the stock has currently broken out of a symmetrical triangle pattern. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for ABNB is if the stock has a daily close above $206.80. This is marked in the chart below as a green color dotted line.
Daily chart – ABNB
ABNB – Symmetrical Triangle Pattern Breakout
#2 Royal Caribbean Cruises Ltd. (NYSE: RCL)
Sector: Consumer Cyclical | Travel 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 RCL is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $97.00. This is marked in the chart below as a green color dotted line.
Daily chart – RCL
RCL – Ascending Triangle Pattern
#3 United Airlines Holdings, Inc. (NASDAQ: UAL)
Sector: Industrials | Airlines
Reason: Breakout from 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 daily chart shows that the stock has currently broken out of a symmetrical triangle pattern. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for UAL is if the stock has a daily close above $53.00. This is marked in the chart below as a green color dotted line.
Daily chart – UAL
UAL – Symmetrical Triangle Pattern Breakout
#4 Shake Shack Inc. (NYSE: SHAK)
Sector: Consumer Cyclical | Restaurants
Reason: Falling Wedge Pattern Breakout
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): The stock has currently broken out of a falling wedge pattern. However, the ideal buy level for SHAK is above the nearest resistance level of $91.50. This is marked in the chart below as a green color dotted line.
Daily chart – SHAK
SHAK – Falling Wedge Pattern Breakout
#5 Carnival Corporation & plc (NYSE: CCL)
Sector: Consumer Cyclical | Travel Services
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 CCL is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, and closes above the price of around $25.80. This is marked in the chart below as a green color dotted line.
Daily chart – CCL
CCL – Symmetrical Triangle Pattern
#6 Endo International plc (NASDAQ: ENDP)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
Reason: Breakout From 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 ENDP is if the stock has a daily close above the near-term resistance level of around $6.20. This is marked in the chart below as a green color dotted line.
Daily chart – ENDP
ENDP – Downtrend Channel Breakout
#7 Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH)
Sector: Consumer Cyclical | Travel Services
Reason: Breakout from 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 daily chart shows that the stock has currently broken out of a symmetrical triangle pattern. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for NCLH is if the stock has a daily close above $29.30. This is marked in the chart below as a green color dotted line.
Daily chart – NCLH
NCLH – Symmetrical Triangle Pattern Breakout
#8 The Boeing Company (NYSE: BA)
Sector: Industrials | Aerospace & Defense
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 BA is if the stock breaks out of the downtrend channel and closes above the near-term resistance level of $232.80. This is marked in the chart below as a green color dotted line.
Daily chart – BA
BA – Downtrend Channel
#9 BigCommerce Holdings, Inc. (NASDAQ: BIGC)
Sector: Technology | Software – Application
Reason: Falling Wedge Pattern Breakout
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): The stock has currently broken out of a falling wedge pattern. However, the ideal buy level for BIGC is above the nearest resistance level of $64.60. This is marked in the chart below as a green color dotted line.
Daily chart – BIGC
BIGC – Falling Wedge Pattern Breakout
#10 Park Hotels & Resorts Inc. (NYSE: PK)
Sector: Real Estate | REIT – Hotel & Motel
Reason: Breakout from 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 daily chart shows that the stock has currently broken out of a symmetrical triangle pattern. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for PK is if the stock has a daily close above $21.70. This is marked in the chart below as a green color dotted line.
Daily chart – PK
PK – Symmetrical Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day