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 | Adobe Inc. | NASDAQ: ADBE | $346.26 | $349.00 | Falling Wedge Pattern Breakout |
| 2 | DigitalBridge Group Inc. | NYSE: DBRG | $14.12 | $14.40 | Flag Pattern Breakout |
| 3 | Invesco Ltd. | NYSE: IVZ | $26.24 | $26.50 | Uptrend Channel Breakout |
| 4 | Comcast Corp. | NASDAQ: CMCSA | $27.31 | $28.10 | Falling Wedge Pattern |
| 5 | American Airlines Group Inc. | NASDAQ: AAL | $14.81 | $15.20 | Uptrend Channel |
| 6 | Meta Platforms Inc. | NASDAQ: META | $673.42 | $702.00 | Downtrend Channel |
| 7 | EchoStar Corp. | NASDAQ: SATS | $82.00 | $83.70 | Flag Pattern Breakout |
| 8 | Dollar General Corp. | NYSE: DG | $132.37 | $135.00 | Symmetrical Triangle Pattern Breakout |
| 9 | Treasure Global Inc. | NASDAQ: TGL | $25.44 | $30.00 | Falling Wedge Pattern Breakout |
| 10 | Warner Bros. Discovery Inc. | NASDAQ: WBD | $26.08 | $26.20 | Rising 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 Adobe Inc. (NASDAQ: ADBE)
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 ADBE is above the nearest resistance level of $349.00. This is marked in the chart below as a green color dotted line.
Daily chart – ADBE
ADBE – Falling Wedge Pattern Breakout
#2 DigitalBridge Group Inc. (NYSE: DBRG)
Sector: Financial • Asset Management
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 DBRG is above the near-term resistance level of $14.40. This is marked in the chart below as a green color dotted line.
Daily chart – DBRG
DBRG – Flag Pattern Breakout
#3 Invesco Ltd. (NYSE: IVZ)
Sector: Financial • Asset Management
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 IVZ is if the stock has a daily close above the near-term resistance level of $26.50. This is marked in the chart below as a green color dotted line.
Daily chart – IVZ
IVZ – Uptrend Channel Breakout
#4 Comcast Corp. (NASDAQ: CMCSA)
Sector: Communication Services • Telecom Services
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 CMCSA is if the stock breaks out of the falling wedge pattern, at a price of around $28.10. This is marked in the chart below as a green color dotted line.
Daily chart – CMCSA
CMCSA – Falling Wedge Pattern
#5 American Airlines Group Inc. (NASDAQ: AAL)
Sector: Industrials • Airlines
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 AAL is if the stock breaks out of the uptrend channel and has a daily close above $15.20. This is marked in the chart below as a green color dotted line.
Daily chart – AAL
AAL – Uptrend Channel
#6 Meta Platforms Inc. (NASDAQ: META)
Sector: Communication Services • Internet Content & Information
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 META is if the stock breaks out of the downtrend channel and has a daily close above $702.00. This is marked in the chart below as a green color dotted line.
Daily chart – META
META – Downtrend Channel
#7 EchoStar Corp. (NASDAQ: SATS)
Sector: Communication Services • Telecom 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 SATS is above the near-term resistance level of $83.70. This is marked in the chart below as a green color dotted line.
Daily chart – SATS
SATS – Flag Pattern Breakout
#8 Dollar General Corp. (YSE: DG)
Sector: Consumer Defensive • Discount Stores
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 DG is if the stock closes above the immediate resistance level of $135.00. This is marked in the chart below as a green color dotted line.
Daily chart – DG
DG – Symmetrical Triangle Pattern Breakout
#9 Treasure Global Inc. (NASDAQ: TGL)
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 TGL is above the nearest resistance level of $30.00. This is marked in the chart below as a green color dotted line.
Daily chart – TGL
TGL – Falling Wedge Pattern Breakout
#10 Warner Bros. Discovery Inc. (NASDAQ: WBD)
Sector: Communication Services • Entertainment
Reason: Rising Wedge Pattern Breakout
A rising wedge pattern is formed by joining two upward-sloping, converging trendlines having a contracting range. The pattern appears to be wide at the bottom and continues to contract as prices rise. A breakout from a rising wedge pattern is often associated with high momentum and can signal an extended move. However, buying on this breakout is considered a more speculative trade due to the potential for a reversal.
Buy Level(s): The stock has currently broken out of a rising wedge pattern. However, the ideal buy level for WBD is above the nearest resistance level of $26.20. This is marked in the chart below as a green color dotted line.
Daily chart – WBD
WBD – Rising Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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