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 | Rocket Companies Inc. | NYSE: RKT | $16.54 | $17.20 | Symmetrical Triangle Pattern |
| 2 | Uber Technologies Inc. | NYSE: UBER | $86.91 | $90.50 | Uptrend Channel |
| 3 | Aurinia Pharmaceuticals Inc. | NASDAQ: AUPH | $10.49 | $10.60 | Breakout From Consolidation Area |
| 4 | 4D Molecular Therapeutics Inc. | NASDAQ: FDMT | $6.42 | $6.60 | Symmetrical Triangle Pattern Breakout |
| 5 | American Superconductor Corp | NASDAQ: AMSC | $53.75 | $57.00 | Uptrend Channel Breakout |
| 6 | PG&E Corp | NYSE: PCG | $14.12 | $14.20 | Falling Wedge Pattern |
| 7 | USA Rare Earth Inc. | NASDAQ: USAR | $13.94 | $15.70 | Symmetrical Triangle Pattern |
| 8 | nVent Electric plc | NYSE: NVT | $89.88 | $90.40 | Ascending Triangle Pattern Breakout |
| 9 | Workiva Inc. | NYSE: WK | $84.30 | $85.00 | Falling Wedge Pattern Breakout |
| 10 | Alphatec Holdings Inc. | NASDAQ: ATEC | $13.77 | $14.00 | 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 Rocket Companies Inc. (NYSE: RKT)
Sector: Financial • Mortgage Finance
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 RKT is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $17.20. This is marked in the chart below as a green color dotted line.
Daily chart – RKT
RKT – Symmetrical Triangle Pattern
#2 Uber Technologies Inc. (NYSE: UBER)
Sector: Technology • Software – Application
Reason: Formation of an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The ideal buy level for UBER is if the stock has a daily close above $90.50. This is marked in the chart below as a green color dotted line.
Daily chart – UBER
UBER – Uptrend Channel
#3 Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH)
Sector: Healthcare • Biotechnology
Reason: Breakout From 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): Although the stock has currently broken out of a consolidation area, the ideal buy level for AUPH is above the near-term resistance area, which translates to a price of around $10.60. This is marked in the chart below as a green color dotted line.
Daily chart – AUPH
AUPH – Breakout From Consolidation Area
#4 4D Molecular Therapeutics Inc. (NASDAQ: FDMT)
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 FDMT is if the stock closes above the immediate resistance level of $6.60. This is marked in the chart below as a green color dotted line.
Daily chart – FDMT
FDMT – Symmetrical Triangle Pattern Breakout
#5 American Superconductor Corp (NASDAQ: AMSC)
Sector: Industrials • Specialty Industrial Machinery
Reason: Breakout From an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The stock has currently broken out of the uptrend channel. However, the ideal buy level for AMSC is if the stock has a daily close above the near-term resistance level of $57.00. This is marked in the chart below as a green color dotted line.
Daily chart – AMSC
AMSC – Uptrend Channel Breakout
#6 PG&E Corp (NYSE: PCG)
Sector: Utilities • Utilities – Regulated Electric
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 PCG is if the stock breaks out of the falling wedge pattern, at a price of around $14.20. This is marked in the chart below as a green color dotted line.
Daily chart – PCG
PCG – Falling Wedge Pattern
#7 USA Rare Earth Inc. (NASDAQ: USAR)
Sector: Basic Materials • Other Industrial Metals & Mining
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 USAR is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $15.70. This is marked in the chart below as a green color dotted line.
Daily chart – USAR
USAR – Symmetrical Triangle Pattern
#8 nVent Electric plc (NYSE: NVT)
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 NVT is if the stock has a daily close above the near-term resistance level of $90.40. This is marked in the chart below as a green color dotted line.
Daily chart – NVT
NVT – Ascending Triangle Pattern Breakout
#9 Workiva Inc. (NYSE: WK)
Sector: Technology • Software – Application
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 WK is above the nearest resistance level of $85.00. This is marked in the chart below as a green color dotted line.
Daily chart – WK
WK – Falling Wedge Pattern Breakout
#10 Alphatec Holdings Inc. (NASDAQ: ATEC)
Sector: Healthcare • Medical Devices
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 ATEC is if the stock closes above the immediate resistance level of $14.00. This is marked in the chart below as a green color dotted line.
Daily chart – ATEC
ATEC – Symmetrical Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day
