The Top 10 Stocks to Watch This Week for Possible Breakouts

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 Snap Inc. NYSE: SNAP $38.91 $46.00 Falling Wedge Pattern Breakout
2 T-Mobile US, Inc. NASDAQ: TMUS $120.94 $121.80 Downtrend Channel Breakout
3 TEGNA Inc. NYSE: TGNA $21.34 $21.70 Symmetrical Triangle Pattern Breakout
4 Aon plc NYSE: AON $291.31 $302.50 Flag Pattern Breakout
5 Bill.com Holdings, Inc. NYSE: BILL $231.67 $248.90 Falling Wedge Pattern Breakout
6 Corteva, Inc. NYSE: CTVA $50.25 $50.80 Ascending Triangle Pattern Breakout
7 DXC Technology Company NYSE: DXC $36.03 $36.70 Downtrend Channel Breakout
8 Take-Two Interactive Software, Inc. NASDAQ: TTWO $175.00 $182.00 Falling Wedge Pattern
9 Fossil Group, Inc. NASDAQ: FOSL $11.25 $11.60 Consolidation Area
10 NortonLifeLock Inc. NASDAQ: NLOK $27.59 $27.90 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 Snap Inc. (NYSE: SNAP)

Sector: Communication Services | Internet Content & Information

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 SNAP is above the nearest resistance level of $46.00. This is marked in the chart below as a green color dotted line.

Daily chart – SNAP

SNAP – Falling Wedge Pattern Breakout

#2 T-Mobile US, Inc. (NASDAQ: TMUS)

Sector: Communication Services | Telecom Services

Reason: Downtrend Channel Breakout

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 daily chart shows that the stock has currently broken out of a downtrend channel. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for TMUS is if the stock has a daily close above $121.80. This is marked in the chart below as a green color dotted line.

Daily chart – TMUS

TMUS – Downtrend Channel Breakout

#3 TEGNA Inc. (NYSE: TGNA)

Sector: Communication Services | Broadcasting

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 TGNA is if the stock closes above the immediate resistance level of $21.70. This is marked in the chart below as a green color dotted line.

Daily chart – TGNA

TGNA – Symmetrical Triangle Pattern Breakout

#4 Aon plc (NYSE: AON)

Sector: Financial | Insurance Brokers

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 AON is above the near-term resistance level of $302.50. This is marked in the chart below as a green color dotted line.

Daily chart – AON

AON – Flag Pattern Breakout

#5 Bill.com Holdings, Inc. (NYSE: BILL)

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 BILL is above the nearest resistance level of $248.90. This is marked in the chart below as a green color dotted line.

Daily chart – BILL

BILL – Falling Wedge Pattern Breakout

#6 Corteva, Inc. (NYSE: CTVA)

Sector: Basic Materials | Agricultural Inputs

Reason: Breakout From 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): Although the stock has broken out of the ascending triangle pattern, the ideal buy level for CTVA is if the stock has a daily close above the near-term resistance level of $50.80. This is marked in the chart below as a green color dotted line.

Daily chart – CTVA

CTVA – Ascending Triangle Pattern Breakout

#7 DXC Technology Company (NYSE: DXC)

Sector: Technology | Information Technology Services

Reason: Downtrend Channel Breakout

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 daily chart shows that the stock has currently broken out of a downtrend channel. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for DXC is if the stock has a daily close above $36.70. This is marked in the chart below as a green color dotted line.

Daily chart – DXC

DXC – Downtrend Channel Breakout

#8 Take-Two Interactive Software, Inc. (NASDAQ: TTWO)

Sector: Communication Services | Electronic Gaming & Multimedia

Reason: Formation of 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): The ideal buy level for TTWO is if the stock breaks out of the falling wedge pattern, at a price of around $182.00. This is marked in the chart below as a green color dotted line.

Daily chart – TTWO

TTWO – Falling Wedge Pattern

#9 Fossil Group, Inc. (NASDAQ: FOSL)

Sector: Consumer Cyclical | Luxury Goods

Reason: Formation of a Consolidation Area in the Daily Chart

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 FOSL is above the breakout level of the consolidation area, at around $11.60. This is marked in the chart below as a green color dotted line.

Daily chart – FOSL

FOSL – Consolidation Area

#10 NortonLifeLock Inc. (NASDAQ: NLOK)

Sector: Technology | Software – Infrastructure

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 NLOK is if the stock closes above the immediate resistance level of $27.90. This is marked in the chart below as a green color dotted line.

Daily chart – NLOK

NLOK – Symmetrical Triangle Pattern Breakout

Happy Trading!

Trades of The Day Research Team

Buy and Hold These 3 Dividend Stocks Forever [sponsor]
What's the one thing you need to stay retired? That's right... cash. Money to pay the bills. Money to weather any financial crisis like the one we're in now and whatever comes next. I've located three stocks that if you buy and hold them forever, they could serve as the backbone to your retirement. Click here for details.

Source: Trades of the Day