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 Block, Inc. NYSE: SQ $119.82 $129.80 Downtrend Channel Breakout
2 U.S. Silica Holdings, Inc. NYSE: SLCA $14.09 $14.25 Symmetrical Triangle Pattern Breakout
3 Etsy, Inc. NASDAQ: ETSY $148.94 $158.00 Falling Wedge Pattern Breakout
4 AerCap Holdings N.V. NYSE: AER $62.81 $69.00 Ascending Triangle Pattern
5 DraftKings Inc. NASDAQ: DKNG $22.20 $24.30 Falling Wedge Pattern
6 Farfetch Limited NYSE: FTCH $20.92 $23.30 Downtrend Channel
7 Playtika Holding Corp. NASDAQ: PLTK $21.28 $22.60 Symmetrical Triangle Pattern Breakout
8 3M Company NYSE: MMM $150.51 $151.70 Falling Wedge Pattern
9 Maravai LifeSciences Holdings, Inc. NASDAQ: MRVI $37.11 $39.40 Downtrend Channel Breakout
10 Aerie Pharmaceuticals, Inc. NASDAQ: AERI $7.64 $8.70 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 Block, Inc. (NYSE: SQ)

Sector: Technology | Software – Infrastructure

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 SQ is if the stock has a daily close above $129.80. This is marked in the chart below as a green color dotted line.

Daily chart – SQ

SQ- Downtrend Channel Breakout

#2 U.S. Silica Holdings, Inc. (NYSE: SLCA)

Sector: Energy | Oil & Gas Equipment & Services

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 SLCA is if the stock closes above the immediate resistance level of $14.25. This is marked in the chart below as a green color dotted line.

Daily chart – SLCA

SLCA – Symmetrical Triangle Pattern Breakout

#3 Etsy, Inc. (NASDAQ: ETSY)

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 ETSY is above the nearest resistance level of $158.00. This is marked in the chart below as a green color dotted line.

Daily chart – ETSY

ETSY – Falling Wedge Pattern Breakout

#4 AerCap Holdings N.V. (NYSE: AER)

Sector: Industrials | Airports & Air 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 AER is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $69.00. This is marked in the chart below as a green color dotted line.

Daily chart – AER

AER – Ascending Triangle Pattern

#5 DraftKings Inc. (NASDAQ: DKNG)

Sector: Consumer Cyclical | Gambling

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 DKNG is if the stock breaks out of the falling wedge pattern, at a price of around $24.30. This is marked in the chart below as a green color dotted line.

Daily chart – DKNG

DKNG – Falling Wedge Pattern

#6 Farfetch Limited (NYSE: FTCH)

Sector: Consumer Cyclical | Internet Retail

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 daily chart shows that the stock is currently forming a downtrend channel. The ideal buy level for FTCH is if the stock breaks out of the downtrend channel and has a daily close above $23.30. This is marked in the chart below as a green color dotted line.

Daily chart – FTCH

FTCH – Downtrend Channel

#7 Playtika Holding Corp. (NASDAQ: PLTK)

Sector: Communication Services | Electronic Gaming & Multimedia

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 PLTK is if the stock closes above the immediate resistance level of $22.60. This is marked in the chart below as a green color dotted line.

Daily chart – PLTK

PLTK – Symmetrical Triangle Pattern Breakout

#8 3M Company (NYSE: MMM)

Sector: Industrials | Specialty Industrial Machinery

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 MMM is if the stock breaks out of the falling wedge pattern, at a price of around $151.70. This is marked in the chart below as a green color dotted line.

Daily chart – MMM

MMM – Falling Wedge Pattern

#9 Maravai LifeSciences Holdings, Inc. (NASDAQ: MRVI)

Sector: Healthcare | Biotechnology

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 MRVI is if the stock has a daily close above $39.40. This is marked in the chart below as a green color dotted line.

Daily chart – MRVI

MRVI – Downtrend Channel Breakout

#10 Aerie Pharmaceuticals, Inc. (NASDAQ: AERI)

Sector: Healthcare | Drug Manufacturers – Specialty & Generic

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 AERI is above the nearest resistance level of $8.70. This is marked in the chart below as a green color dotted line.

Daily chart – AERI

AERI – Falling Wedge Pattern Breakout

Happy Trading!

Trades of The Day Research Team

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Source: Trades of the Day