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 | BTC Digital Ltd | NASDAQ: BTCT | $8.26 | $9.25 | Symmetrical Triangle Pattern Breakout |
| 2 | ChampionX Corp | NASDAQ: CHX | $31.21 | $31.70 | Downtrend Channel Breakout |
| 3 | Alibaba Group Holding Ltd ADR | NYSE: BABA | $85.12 | $86.30 | Falling Wedge Pattern Breakout |
| 4 | Core Scientific Inc. | NASDAQ: CORZ | $15.00 | $15.40 | Flag Pattern Breakout |
| 5 | JD.com Inc. ADR | NASDAQ: JD | $39.00 | $39.30 | Symmetrical Triangle Pattern Breakout |
| 6 | Ford Motor Co | NYSE: F | $10.18 | $10.30 | Falling Wedge Pattern |
| 7 | Tesla Inc. | NASDAQ: TSLA | $426.50 | $430.00 | Flag Pattern |
| 8 | Vale S.A. ADR | NYSE: VALE | $8.94 | $9.10 | Falling Wedge Pattern |
| 9 | Schlumberger Ltd | NYSE: SLB | $43.58 | $44.30 | Downtrend Channel Breakout |
| 10 | Intel Corp | NASDAQ: INTC | $21.49 | $22.00 | 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 BTC Digital Ltd (NASDAQ: BTCT)
Sector: Technology • Computer Hardware
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 BTCT is if the stock closes above the immediate resistance level of $9.25. This is marked in the chart below as a green color dotted line.
Daily chart – BTCT
BTCT – Symmetrical Triangle Pattern Breakout
#2 ChampionX Corp (NASDAQ: CHX)
Sector: Energy • Oil & Gas Equipment & 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 CHX is if the stock has a daily close above $31.70. This is marked in the chart below as a green color dotted line.
Daily chart – CHX
CHX – Downtrend Channel Breakout
#3 Alibaba Group Holding Ltd ADR (NYSE: BABA)
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 BABA is above the nearest resistance level of $86.30. This is marked in the chart below as a green color dotted line.
Daily chart – BABA
BABA – Falling Wedge Pattern Breakout
#4 Core Scientific Inc. (NASDAQ: CORZ)
Sector: Technology • Software – Infrastructure
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 CORZ is above the near-term resistance level of $15.40. This is marked in the chart below as a green color dotted line.
Daily chart – CORZ
CORZ – Flag Pattern Breakout
#5 JD.com Inc. ADR (NASDAQ: JD)
Sector: Consumer Cyclical • Internet Retail
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 JD is if the stock closes above the immediate resistance level of $39.30. This is marked in the chart below as a green color dotted line.
Daily chart – JD
JD – Symmetrical Triangle Pattern Breakout
#6 Ford Motor Co (NYSE: F)
Sector: Consumer Cyclical • Auto Manufacturers
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 F is if the stock breaks out of the falling wedge pattern, at a price of around $10.30. This is marked in the chart below as a green color dotted line.
Daily chart – F
F – Falling Wedge Pattern
#7 Tesla Inc. (NASDAQ: TSLA)
Sector: Consumer Cyclical • Auto Manufacturers
Reason: Formation of 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): The ideal buy level for TSLA is if the stock breaks out of the flag pattern, at around $430.00. This is marked in the chart below as a green color dotted line.
Daily chart – TSLA
TSLA – Flag Pattern
#8 Vale S.A. ADR (NYSE: VALE)
Sector: Basic Materials • Other Industrial Metals & Mining
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 VALE is if the stock breaks out of the falling wedge pattern, at a price of around $9.10. This is marked in the chart below as a green color dotted line.
Daily chart – VALE
VALE – Falling Wedge Pattern
#9 Schlumberger Ltd (NYSE: SLB)
Sector: Energy • Oil & Gas Equipment & 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 SLB is if the stock has a daily close above $44.30. This is marked in the chart below as a green color dotted line.
Daily chart – SLB
SLB – Downtrend Channel Breakout
#10 Intel Corp (NASDAQ: INTC)
Sector: Technology • Semiconductors
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 INTC is above the nearest resistance level of $22.00. This is marked in the chart below as a green color dotted line.
Daily chart – INTC
INTC – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day