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 | Forward Air Corp. | NASDAQ: FWRD | $28.55 | $31.00 | Symmetrical Triangle Pattern |
| 2 | Transportadora de Gas del Sur ADR | NYSE: TGS | $19.57 | $19.80 | Downtrend Channel Breakout |
| 3 | Alibaba Group Holding Ltd ADR | NYSE: BABA | $83.18 | $84.70 | Symmetrical Triangle Pattern Breakout |
| 4 | Caleres Inc. | NYSE: CAL | $41.85 | $42.00 | Flag Pattern Breakout |
| 5 | Roblox Corporation | NYSE: RBLX | $40.59 | $42.00 | Symmetrical Triangle Pattern |
| 6 |
StoneCo Ltd |
NASDAQ: STNE | $14.44 | $14.80 | Downtrend Channel Breakout |
| 7 | Aurinia Pharmaceuticals Inc. | NASDAQ: AUPH | $6.26 | $6.65 | Symmetrical Triangle Pattern Breakout |
| 8 | Ulta Beauty Inc. | NASDAQ: ULTA | $377.23 | $383.00 | Falling Wedge Pattern Breakout |
| 9 | JD.com Inc ADR | NASDAQ: JD | $29.29 | $29.70 | Symmetrical Triangle Pattern Breakout |
| 10 | Cisco Systems, Inc. | NASDAQ: CSCO | $49.46 | $50.00 | 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 Forward Air Corp. (NASDAQ: FWRD)
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 FWRD is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $31.00. This is marked in the chart below as a green color dotted line.
Daily chart – FWRD
FWRD – Symmetrical Triangle Pattern
#2 Transportadora de Gas del Sur ADR (NYSE: TGS)
Sector: Energy • Oil & Gas Integrated
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 TGS is if the stock has a daily close above $19.80. This is marked in the chart below as a green color dotted line.
Daily chart – TGS
TGS – Downtrend Channel Breakout
#3 Alibaba Group Holding Ltd ADR (NYSE: BABA)
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 BABA is if the stock closes above the immediate resistance level of $84.70. This is marked in the chart below as a green color dotted line.
Daily chart – BABA
BABA – Symmetrical Triangle Pattern Breakout
#4 Caleres Inc. (NYSE: CAL)
Sector: Consumer Cyclical • Apparel Retail
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 CAL is above the near-term resistance level of $42.00. This is marked in the chart below as a green color dotted line.
Daily chart – CAL
CAL – Flag Pattern Breakout
#5 Roblox Corporation (NYSE: RBLX)
Sector: Communication Services • Electronic Gaming & Multimedia
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 RBLX is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $42.00. This is marked in the chart below as a green color dotted line.
Daily chart – RBLX
RBLX – Symmetrical Triangle Pattern
#6 StoneCo Ltd (NASDAQ: STNE)
Sector: Technology • Software – Infrastructure • Cayman Islands
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 STNE is if the stock has a daily close above $14.80. This is marked in the chart below as a green color dotted line.
Daily chart – STNE
STNE – Downtrend Channel Breakout
#7 Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH)
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 AUPH is if the stock closes above the immediate resistance level of $6.65. This is marked in the chart below as a green color dotted line.
Daily chart – AUPH
AUPH – Symmetrical Triangle Pattern Breakout
#8 Ulta Beauty Inc. (NASDAQ: ULTA)
Sector: Consumer Cyclical • Specialty 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 ULTA is above the nearest resistance level of $383.00. This is marked in the chart below as a green color dotted line.
Daily chart – ULTA
ULTA – Falling Wedge Pattern Breakout
#9 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 $29.70. This is marked in the chart below as a green color dotted line.
Daily chart – JD
JD – Symmetrical Triangle Pattern Breakout
#10 Cisco Systems, Inc. (NASDAQ: CSCO)
Sector: Technology • Communication Equipment
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 CSCO is above the nearest resistance level of $50.00. This is marked in the chart below as a green color dotted line.
Daily chart – CSCO
CSCO – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day