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 | Antero Resources Corporation | NYSE: AR | $19.62 | $21.60 | Ascending Triangle Pattern |
| 2 | Qualtrics International Inc. | NASDAQ: XM | $27.06 | $30.00 | Falling Wedge Pattern |
| 3 | Galapagos NV | NASDAQ: GLPG | $67.45 | $72.00 | Downtrend Channel Breakout |
| 4 | Sirius XM Holdings Inc. | NASDAQ: SIRI | $6.19 | $6.40 | Symmetrical Triangle Pattern |
| 5 | Nuance Communications, Inc. | NASDAQ: NUAN | $55.08 | $55.50 | Consolidation Area |
| 6 | Robinhood Markets, Inc. | NASDAQ: HOOD | $12.73 | $16.60 | Falling Wedge Pattern |
| 7 | US Foods Holding Corp. | NYSE: USFD | $34.44 | $35.30 | Symmetrical Triangle Pattern |
| 8 | Atlassian Corporation Plc | NASDAQ: TEAM | $319.17 | $345.40 | Falling Wedge Pattern |
| 9 | Blackstone Inc. | NYSE: BX | $124.28 | $129.50 | Flag Pattern Breakout |
| 10 | Dow Inc. | NYSE: DOW | $60.04 | $61.00 | 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 Antero Resources Corporation (NYSE: AR)
Sector: Energy | Oil & Gas E&P
Reason: Formation of 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): The ideal buy level for AR is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $21.60. This is marked in the chart below as a green color dotted line.
Daily chart – AR
AR – Ascending Triangle Pattern
#2 Qualtrics International Inc. (NASDAQ: XM)
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 XM is if the stock breaks out of the falling wedge pattern, at a price of around $30.00. This is marked in the chart below as a green color dotted line.
Daily chart – XM
XM – Falling Wedge Pattern
#3 Galapagos NV (NASDAQ: GLPG)
Sector: Healthcare | Biotechnology
Reason: Breakout From 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): Although the stock has broken out of the downtrend channel, the ideal buy level for GLPG is if it has a daily close above the near-term resistance level of around $72.00. This is marked in the chart below as a green color dotted line.
Daily chart – GLPG
GLPG – Downtrend Channel Breakout
#4 Sirius XM Holdings Inc. (NASDAQ: SIRI)
Sector: Communication Services | Broadcasting
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 an 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 SIRI is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $6.40. This is marked in the chart below as a green color dotted line.
Daily chart – SIRI
SIRI – Symmetrical Triangle Pattern
#5 Nuance Communications, Inc. (NASDAQ: NUAN)
Sector: Technology | Software – Application
Reason: Formation of 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): The ideal buy level for NUAN is above the breakout level of the consolidation area, at around $55.50. This is marked in the chart below as a green color dotted line.
Daily chart – NUAN
NUAN – Consolidation Area
#6 Robinhood Markets, Inc. (NASDAQ: HOOD)
Sector: Technology | Software – Infrastructure
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 HOOD is if the stock breaks out of the falling wedge pattern, at a price of around $16.60. This is marked in the chart below as a green color dotted line.
Daily chart – HOOD
HOOD – Falling Wedge Pattern
#7 US Foods Holding Corp. (NYSE: USFD)
Sector: Consumer Defensive | Food Distribution
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 an 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 USFD is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $35.30. This is marked in the chart below as a green color dotted line.
Daily chart – USFD
USFD – Symmetrical Triangle Pattern_
#8 Atlassian Corporation Plc (NASDAQ: TEAM)
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 TEAM is if the stock breaks out of the falling wedge pattern, at a price of around $345.40. This is marked in the chart below as a green color dotted line.
Daily chart – TEAM
TEAM – Falling Wedge Pattern
#9 Blackstone Inc. (NYSE: BX)
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 BX is above the near-term resistance level of $129.50. This is marked in the chart below as a green color dotted line.
Daily chart – BX
BX – Flag Pattern Breakout
#10 Dow Inc. (NYSE: DOW)
Sector: Basic Materials | Chemicals
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 DOW is above the nearest resistance level of $61.00. This is marked in the chart below as a green color dotted line.
Daily chart – DOW
DOW – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
Strange change at your bank [sponsor]At least 41 major US banks have just made a drastic change to the way money in America works. It could have some major implications for you, your money and your retirement. But it's crucial you understand what's happening, before these changes get applied to your bank account. Here's everything you need to know.
Source: Trades of the Day