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 MPLX LP NYSE: MPLX $32.54 $33.80 Symmetrical Triangle Pattern
2 Banco Santander-Chile NYSE: BSAC $16.74 $17.10 Downtrend Channel Breakout
3 CF Acquisition Corp. VI NASDAQ: CFVI $11.75 $11.80 Falling Wedge Pattern Breakout
4 Companhia de Saneamento Basico do Estado de Sao Paulo NYSE: SBS $9.41 $9.60 Symmetrical Triangle Pattern Breakout
5 Hollysys Automation Technologies Ltd. NASDAQ: HOLI $19.76 $19.80 Ascending Triangle Pattern Breakout
6 DXC Technology Company NYSE: DXC $27.48 $29.75 Downtrend Channel
7 Pinduoduo Inc. NASDAQ: PDD $72.19 $74.20 Consolidation Area
8 Wheaton Precious Metals Corp. NYSE: WPM $31.15 $32.90 Falling Wedge Pattern
9 Xometry, Inc. NASDAQ: XMTR $52.40 $53.90 Symmetrical Triangle Pattern Breakout
10 indie Semiconductor, Inc. NASDAQ: INDI $8.36 $8.60 Ascending Triangle Pattern

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 MPLX LP (NYSE: MPLX)

Sector: Energy | Oil & Gas Midstream

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 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 MPLX is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $33.80. This is marked in the chart below as a green color dotted line.

Daily chart – MPLX

MPLX – Symmetrical Triangle Pattern

#2 Banco Santander-Chile (NYSE: BSAC)

Sector: Financial | Banks – Regional

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 BSAC is if the stock has a daily close above $17.10. This is marked in the chart below as a green color dotted line.

Daily chart – BSAC

BSAC – Downtrend Channel Breakout

#3 CF Acquisition Corp. VI (NASDAQ: CFVI)

Sector: Financial | Shell Companies

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 CFVI is above the nearest resistance level of $11.80. This is marked in the chart below as a green color dotted line.

Daily chart – CFVI

CFVI – Falling Wedge Pattern Breakout

#4 Companhia de Saneamento Basico do Estado de Sao Paulo (NYSE: SBS)

Sector: Utilities | Utilities – Regulated Water

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 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 SBS is if the stock closes above the immediate resistance level of $9.60. This is marked in the chart below as a green color dotted line.

Daily chart – SBS

SBS – Symmetrical Triangle Pattern Breakout

#5 Hollysys Automation Technologies Ltd. (NASDAQ: HOLI)

Sector: Industrials | Electrical Equipment & Parts

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 HOLI is if the stock has a daily close above the near-term resistance level of $19.80. This is marked in the chart below as a green color dotted line.

Daily chart – HOLI

HOLI – Ascending Triangle Pattern Breakout

#6 DXC Technology Company (NYSE: DXC)

Sector: Technology | Information Technology Services

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 DXC is if the stock breaks out of the downtrend channel and has a daily close above $29.75. This is marked in the chart below as a green color dotted line.

Daily chart – DXC

DXC – Downtrend Channel

#7 Pinduoduo Inc. (NASDAQ: PDD)

Sector: Consumer Cyclical | Internet Retail

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 PDD is above the breakout level of the consolidation area, at around $74.20. This is marked in the chart below as a green color dotted line.

Daily chart – PDD

PDD – Consolidation Area

 

#8 Wheaton Precious Metals Corp. (NYSE: WPM)

Sector: Basic Materials | Gold

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 WPM is if the stock breaks out of the falling wedge pattern, at a price of around $32.90. This is marked in the chart below as a green color dotted line.

Daily chart – WPM

WPM – Falling Wedge Pattern

#9 Xometry, Inc. (NASDAQ: XMTR)

Sector: Industrials | Specialty Industrial Machinery

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 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 XMTR is if the stock closes above the immediate resistance level of $53.90. This is marked in the chart below as a green color dotted line.

Daily chart – XMTR

XMTR – Symmetrical Triangle Pattern Breakout

#10 indie Semiconductor, Inc. (NASDAQ: INDI)

Sector: Technology | Semiconductor Equipment & Materials

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 INDI is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $8.60. This is marked in the chart below as a green color dotted line.

Daily chart – INDI

INDI – Ascending Triangle Pattern

Happy Trading!

Trades of The Day Research Team

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Source: Trades of the Day