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 | Calix, Inc. | NYSE: CALX | $79.97 | $80.60 | Symmetrical Triangle Pattern Breakout |
| 2 | Bath & Body Works, Inc. | NYSE: BBWI | $69.79 | $76.50 | Flag Pattern |
| 3 | Arena Pharmaceuticals, Inc. | NASDAQ: ARNA | $92.94 | $94.20 | Falling Wedge Pattern Breakout |
| 4 | DuPont de Nemours, Inc. | NYSE: DD | $80.78 | $81.40 | Symmetrical Triangle Pattern Breakout |
| 5 | Krispy Kreme, Inc. | NASDAQ: DNUT | $18.92 | $19.40 | Rounding Bottom Pattern Breakout |
| 6 | eBay Inc. | NASDAQ: EBAY | $66.50 | $71.60 | Falling Wedge Pattern Breakout |
| 7 | Hilton Worldwide Holdings Inc. | NYSE: HLT | $155.99 | $157.00 | Symmetrical Triangle Pattern Breakout |
| 8 | United Community Banks, Inc. | NASDAQ: UCBI | $35.94 | $37.00 | Flag Pattern |
| 9 | Roblox Corporation | NYSE: RBLX | $103.16 | $109.60 | Symmetrical Triangle Pattern |
| 10 | HUYA Inc. | NYSE: HUYA | $6.94 | $10.20 | Falling Wedge 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 Calix, Inc. (NYSE: CALX)
Sector: Technology | Software – Application
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 CALX is if the stock closes above the immediate resistance level of $80.60. This is marked in the chart below as a green color dotted line.
Daily chart – CALX
CALX – Symmetrical Triangle Pattern Breakout
#2 Bath & Body Works, Inc. (NYSE: BBWI)
Sector: Consumer Cyclical | Specialty Retail
Reason: Formation of 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): The ideal buy level for BBWI is if the stock breaks out of the flag pattern, at around $76.50. This is marked in the chart below as a green color dotted line.
Daily chart – BBWI
BBWI – Flag Pattern
#3 Arena Pharmaceuticals, Inc. (NASDAQ: ARNA)
Sector: Healthcare | Biotechnology
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 ARNA is above the nearest resistance level of $94.20. This is marked in the chart below as a green color dotted line.
Daily chart – ARNA
ARNA – Falling Wedge Pattern Breakout
#4 DuPont de Nemours, Inc. (NYSE: DD)
Sector: Basic Materials | Chemicals
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 DD is if the stock closes above the immediate resistance level of $81.40. This is marked in the chart below as a green color dotted line.
Daily chart – DD
DD – Symmetrical Triangle Pattern Breakout
#5 Krispy Kreme, Inc. (NASDAQ: DNUT)
Sector: Consumer Defensive | Grocery Stores
Reason: Breakout From a Rounding Bottom Pattern
A rounding bottom pattern, also referred to as a saucer bottom, is a reversal chart pattern. It is identified by a series of price movements that graphically form the shape of a “U”. Rounding bottoms are found at the end of extended downward trends and signify a reversal in long-term price movements.
Buy Level(s): The stock has currently broken out of the rounding bottom pattern. However, the ideal buy level for DNUT is if the stock has a daily close above $19.40. This is marked in the chart below as a green color dotted line.
Daily chart – DNUT
DNUT – Rounding Bottom Pattern Breakout
#6 eBay Inc. (NASDAQ: EBAY)
Sector: Consumer Cyclical | Internet Retail
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 EBAY is above the nearest resistance level of $71.60. This is marked in the chart below as a green color dotted line.
Daily chart – EBAY
EBAY – Falling Wedge Pattern Breakout
#7 Hilton Worldwide Holdings Inc. (NYSE: HLT)
Sector: Consumer Cyclical | Lodging
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 HLT is if the stock closes above the immediate resistance level of $157.00. This is marked in the chart below as a green color dotted line.
Daily chart – HLT
HLT – Symmetrical Triangle Pattern Breakout
#8 United Community Banks, Inc. (NASDAQ: UCBI)
Sector: Financial | Banks – Regional
Reason: Formation of 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): The ideal buy level for UCBI is if the stock breaks out of the flag pattern, at around $37.00. This is marked in the chart below as a green color dotted line.
Daily chart – UCBI
UCBI – Flag Pattern
#9 Roblox Corporation (NYSE: RBLX)
Sector: Communication Services | Electronic Gaming & Multimedia
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 RBLX is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $109.60. This is marked in the chart below as a green color dotted line.
Daily chart – RBLX
RBLX – Symmetrical Triangle Pattern
#10 HUYA Inc. (NYSE: HUYA)
Sector: Communication Services | Entertainment
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 HUYA is above the nearest resistance level of $10.20. This is marked in the chart below as a green color dotted line.
Daily chart – HUYA
HUYA – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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