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 | On Holding AG | NYSE: ONON | $42.40 | $43.90 | Downtrend Channel Breakout |
| 2 | Oracle Corp. | NYSE: ORCL | $222.85 | $250.00 | Flag Pattern |
| 3 | United Parcel Service, Inc. | NYSE: UPS | $95.98 | $98.20 | Symmetrical Triangle Pattern |
| 4 | Cisco Systems, Inc. | NASDAQ: CSCO | $78.00 | $78.60 | Uptrend Channel |
| 5 | NICE Ltd ADR | NASDAQ: NICE | $133.38 | $135.80 | Falling Wedge Pattern |
| 6 | L3Harris Technologies Inc. | NYSE: LHX | $289.39 | $298.00 | Flag Pattern |
| 7 | Ondas Holdings Inc. | NASDAQ: ONDS | $7.18 | $7.40 | Symmetrical Triangle Pattern Breakout |
| 8 | Cidara Therapeutics Inc. | NASDAQ: CDTX | $217.71 | $219.00 | Uptrend Channel Breakout |
| 9 | Ryder System, Inc. | NYSE: R | $170.49 | $172.50 | Flag Pattern |
| 10 | Berkshire Hathaway Inc. | NYSE: BRK.B | $508.94 | $519.00 | 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 On Holding AG (NYSE: ONON)
Sector: Consumer Cyclical • Footwear & Accessories
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 ONON is if the stock has a daily close above $43.90. This is marked in the chart below as a green color dotted line.
Daily chart – ONON
ONON – Downtrend Channel Breakout
#2 Oracle Corp. (NYSE: ORCL)
Sector: Technology • Software – Infrastructure
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 ORCL is if the stock breaks out of the flag pattern, at around $250.00. This is marked in the chart below as a green color dotted line.
Daily chart – ORCL
ORCL – Flag Pattern
#3 United Parcel Service, Inc. (NYSE: UPS)
Sector: Industrials • Integrated Freight & Logistics
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 UPS is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $98.20. This is marked in the chart below as a green color dotted line.
Daily chart – UPS
UPS – Symmetrical Triangle Pattern
#4 Cisco Systems, Inc. (NASDAQ: CSCO)
Sector: Technology • Communication Equipment
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 CSCO is if the stock breaks out of the uptrend channel and has a daily close above $78.60. This is marked in the chart below as a green color dotted line.
Daily chart – CSCO
CSCO – Uptrend Channel
#5 NICE Ltd ADR (NASDAQ: NICE)
Sector: Technology • Software – Application
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 NICE is if the stock breaks out of the falling wedge pattern, at a price of around $135.80. This is marked in the chart below as a green color dotted line.
Daily chart – NICE
NICE – Falling Wedge Pattern
#6 L3Harris Technologies Inc. (NYSE: LHX)
Sector: Industrials • Aerospace & Defense
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 LHX is if the stock breaks out of the flag pattern, at around $298.00. This is marked in the chart below as a green color dotted line.
Daily chart – LHX
LHX – Flag Pattern
#7 Ondas Holdings Inc. (NASDAQ: ONDS)
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 ONDS is if the stock closes above the immediate resistance level of $7.40. This is marked in the chart below as a green color dotted line.
Daily chart – ONDS
ONDS – Symmetrical Triangle Pattern Breakout
#8 Cidara Therapeutics Inc. (NASDAQ: CDTX)
Sector: Healthcare • Biotechnology
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 CDTX is if the stock has a daily close above the near-term resistance level of $219.00. This is marked in the chart below as a green color dotted line.
Daily chart – CDTX
CDTX – Uptrend Channel Breakout
#9 Ryder System, Inc. (NYSE: R)
Sector: Industrials • Rental & Leasing Services
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 R is if the stock breaks out of the flag pattern, at around $172.50. This is marked in the chart below as a green color dotted line.
Daily chart – R
R – Flag Pattern
#10 Berkshire Hathaway Inc. (NYSE: BRK.B)
Sector: Financial • Insurance – 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 BRK.B is if the stock closes above the immediate resistance level of $519.00. This is marked in the chart below as a green color dotted line.
Daily chart – BRK.B
BRK.B – Symmetrical Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day
