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 | Trip.com Group Ltd ADR | NASDAQ: TCOM | $36.01 | $36.75 | Symmetrical Triangle Pattern Breakout |
| 2 | TJX Companies, Inc. | NYSE: TJX | $93.81 | $94.10 | Flag Pattern Breakout |
| 3 | Zevra Therapeutics Inc. | NASDAQ: ZVRA | $6.55 | $6.70 | Symmetrical Triangle Pattern Breakout |
| 4 | Bilibili Inc ADR | NASDAQ: BILI | $12.17 | $13.00 | Falling Wedge Pattern |
| 5 | Boston Scientific Corp. | NYSE: BSX | $57.81 | $58.00 | Ascending Triangle Pattern Breakout |
| 6 | Bank Of Nova Scotia | NYSE: BNS | $48.69 | $49.10 | Symmetrical Triangle Pattern Breakout |
| 7 | Tyson Foods, Inc. | NYSE: TSN | $53.75 | $54.90 | Falling Wedge Pattern Breakout |
| 8 | Hello Group Inc. ADR | NASDAQ: MOMO | $6.95 | $7.40 | Consolidation Area |
| 9 | Harmonic, Inc. | NASDAQ: HLIT | $13.04 | $13.50 | Symmetrical Triangle Pattern Breakout |
| 10 | EchoStar Corp | NASDAQ: SATS | $16.57 | $17.00 | 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 Trip.com Group Ltd ADR (NASDAQ: TCOM)
Sector: Consumer Cyclical • Travel 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 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 TCOM is if the stock closes above the immediate resistance level of $36.75. This is marked in the chart below as a green color dotted line.
Daily chart – TCOM
TCOM – Symmetrical Triangle Pattern Breakout
#2 TJX Companies, Inc. (NYSE: TJX)
Sector: Consumer Cyclical • Apparel Retail
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 TJX is above the near-term resistance level of $94.10. This is marked in the chart below as a green color dotted line.
Daily chart – TJX
TJX – Flag Pattern Breakout
#3 Zevra Therapeutics Inc. (NASDAQ: ZVRA)
Sector: Healthcare • Biotechnology
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 ZVRA is if the stock closes above the immediate resistance level of $6.70. This is marked in the chart below as a green color dotted line.
Daily chart – ZVRA
ZVRA – Symmetrical Triangle Pattern Breakout
#4 Bilibili Inc. ADR (NASDAQ: BILI)
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 BILI is if the stock breaks out of the falling wedge pattern, at a price of around $13.00. This is marked in the chart below as a green color dotted line.
Daily chart – BILI
BILI – Falling Wedge Pattern
#5 Boston Scientific Corp. (NYSE: BSX)
Sector: Healthcare • Medical Devices
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 BSX is if the stock has a daily close above the near-term resistance level of $58.00. This is marked in the chart below as a green color dotted line.
Daily chart – BSX
BSX – Ascending Triangle Pattern Breakout
#6 Bank Of Nova Scotia (NYSE: BNS)
Sector: Financial • Banks – Diversified
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 BNS is if the stock closes above the immediate resistance level of $49.10. This is marked in the chart below as a green color dotted line.
Daily chart – BNS
BNS – Symmetrical Triangle Pattern Breakout
#7 Tyson Foods, Inc. (NYSE: TSN)
Sector: Consumer Defensive • Farm Products
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 TSN is above the nearest resistance level of $54.90. This is marked in the chart below as a green color dotted line.
Daily chart – TSN
TSN – Falling Wedge Pattern Breakout
#8 Hello Group Inc. ADR (NASDAQ: MOMO)
Sector: Communication Services • Internet Content & Information
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 MOMO is above the breakout level of the consolidation area, at around $7.40. This is marked in the chart below as a green color dotted line.
Daily chart – MOMO
MOMO – Consolidation Area
#9 Harmonic, Inc. (NASDAQ: HLIT)
Sector: Technology • Communication Equipment
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 HLIT is if the stock closes above the immediate resistance level of $13.50. This is marked in the chart below as a green color dotted line.
Daily chart – HLIT
HLIT – Symmetrical Triangle Pattern Breakout
#10 EchoStar Corp (NASDAQ: SATS)
Sector: Technology • Communication Equipment
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 SATS is above the nearest resistance level of $17.00. This is marked in the chart below as a green color dotted line.
Daily chart – SATS
SATS – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day