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 | Mobileye Global Inc. | NASDAQ: MBLY | $20.03 | $21.00 | Symmetrical Triangle Pattern |
| 2 | Shell Plc ADR | NYSE: SHEL | $61.69 | $63.60 | Falling Wedge Pattern |
| 3 | Palladyne AI Corp | NASDAQ: PDYN | $11.77 | $12.50 | Symmetrical Triangle Pattern Breakout |
| 4 | Sanofi ADR | NASDAQ: SNY | $48.73 | $49.00 | Downtrend Channel Breakout |
| 5 | MultiPlan Corp | NYSE: MPLN | $17.52 | $18.80 | Falling Wedge Pattern Breakout |
| 6 | Neurocrine Biosciences, Inc. | NASDAQ: NBIX | $139.44 | $141.30 | Symmetrical Triangle Pattern |
| 7 | Advanced Micro Devices Inc. | NASDAQ: AMD | $125.19 | $129.00 | Downtrend Channel |
| 8 | Scorpio Tankers Inc. | NYSE: STNG | $49.51 | $52.00 | Falling Wedge Pattern Breakout |
| 9 | GDS Holdings Limited ADR | NASDAQ: GDS | $22.29 | $23.00 | Flag Pattern Breakout |
| 10 | Phunware Inc. | NASDAQ: PHUN | $5.73 | $6.00 | 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 Mobileye Global Inc. (NASDAQ: MBLY)
Sector: Consumer Cyclical • Auto Parts
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 MBLY is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $21.00. This is marked in the chart below as a green color dotted line.
Daily chart – MBLY
MBLY – Symmetrical Triangle Pattern
#2 Shell Plc ADR (NYSE: SHEL)
Sector: Energy • Oil & Gas Integrated
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 SHEL is if the stock breaks out of the falling wedge pattern, at a price of around $63.60. This is marked in the chart below as a green color dotted line.
Daily chart – SHEL
SHEL – Falling Wedge Pattern
#3 Palladyne AI Corp (NASDAQ: PDYN)
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 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 PDYN is if the stock closes above the immediate resistance level of $12.50. This is marked in the chart below as a green color dotted line.
Daily chart – PDYN
PDYN – Symmetrical Triangle Pattern Breakout
#4 Sanofi ADR (NASDAQ: SNY)
Sector: Healthcare • Drug Manufacturers – General
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 SNY is if the stock has a daily close above $49.00. This is marked in the chart below as a green color dotted line.
Daily chart – SNY
SNY – Downtrend Channel Breakout
#5 MultiPlan Corp (NYSE: MPLN)
Sector: Healthcare • Health Information Services
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, th ideal buy level for MPLN is above the nearest resistance level of $18.80. This is marked in the chart below as a green color dotted line.
Daily chart – MPLN
MPLN – Falling Wedge Pattern Breakout
#6 Neurocrine Biosciences, Inc. (NASDAQ: NBIX)
Sector: Healthcare • Drug Manufacturers – Specialty & Generic
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 NBIX is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $141.30. This is marked in the chart below as a green color dotted line.
Daily chart – NBIX
NBIX – Symmetrical Triangle Pattern
#7 Advanced Micro Devices Inc. (NASDAQ: AMD)
Sector: Technology • Semiconductors
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 AMD is if the stock has a daily close above $129.00. This is marked in the chart below as a green color dotted line.
Daily chart – AMD
AMD – Downtrend Channel
#8 Scorpio Tankers Inc. (NYSE: STNG)
Sector: Energy • Oil & Gas Midstream
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 STNG is above the nearest resistance level of $52.00. This is marked in the chart below as a green color dotted line.
Daily chart – STNG
STNG – Falling Wedge Pattern Breakout
#9 GDS Holdings Limited ADR (NASDAQ: GDS)
Sector: Technology • Information Technology Services
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 GDS is above the near-term resistance level of $23.00. This is marked in the chart below as a green color dotted line.
Daily chart – GDS
GDS – Flag Pattern Breakout
#10 Phunware Inc. (NASDAQ: PHUN)
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 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 PHUN is if the stock closes above the immediate resistance level of $6.00. This is marked in the chart below as a green color dotted line.
Daily chart – PHUN
PHUN – Symmetrical Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day