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 | Futu Holdings Ltd ADR | NASDAQ: FUTU | $63.56 | $65.60 | Symmetrical Triangle Pattern Breakout |
| 2 | U.S. Bancorp. | NYSE: USB | $47.23 | $48.00 | Breakout From Consolidation Area |
| 3 | Bank Of America Corp. | NYSE: BAC | $40.75 | $41.40 | Symmetrical Triangle Pattern Breakout |
| 4 | HF Sinclair Corp. | NYSE: DINO | $49.14 | $49.60 | Downtrend Channel |
| 5 | MongoDB Inc. | NASDAQ: MDB | $290.79 | $310.00 | Falling Wedge Pattern Breakout |
| 6 | KalVista Pharmaceuticals Inc. | NASDAQ: KALV | $13.39 | $15.50 | Symmetrical Triangle Pattern |
| 7 | Telus Corp. | NYSE: TU | $16.14 | $16.50 | Downtrend Channel |
| 8 | Dell Technologies Inc. | NYSE: DELL | $115.54 | $119.00 | Symmetrical Triangle Pattern Breakout |
| 9 | Tenaris S.A. ADR | NYSE: TS | $29.69 | $30.50 | Falling Wedge Pattern |
| 10 | Flutter Entertainment Plc | NYSE: FLUT | $212.41 | $214.50 | Symmetrical Triangle Pattern |
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 Futu Holdings Ltd ADR (NASDAQ: FUTU)
Sector: Financial • Capital Markets
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 FUTU is if the stock closes above the immediate resistance level of $65.60. This is marked in the chart below as a green color dotted line.
Daily chart – FUTU
FUTU – Symmetrical Triangle Pattern Breakout
#2 U.S. Bancorp. (NYSE: USB)
Sector: Financial • Banks – Regional
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 USB is above the near-term resistance area, which translates to a price of around $48.00. This is marked in the chart below as a green color dotted line.
Daily chart – USB
USB – Breakout From Consolidation Area
#3 Bank Of America Corp. (NYSE: BAC)
Sector: Financial • Banks – 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 BAC is if the stock closes above the immediate resistance level of $41.40. This is marked in the chart below as a green color dotted line.
Daily chart – BAC
BAC – Symmetrical Triangle Pattern Breakout
#4 HF Sinclair Corp. (NYSE: DINO)
Sector: Energy • Oil & Gas Refining & Marketing
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 DINO is if the stock breaks out of the downtrend channel and has a daily close above $49.60. This is marked in the chart below as a green color dotted line.
Daily chart – DINO
DINO – Downtrend Channel
#5 MongoDB Inc. (NASDAQ: MDB)
Sector: Technology • Software – Infrastructure
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 MDB is above the nearest resistance level of $310.00. This is marked in the chart below as a green color dotted line.
Daily chart – MDB
MDB – Falling Wedge Pattern Breakout
#6 KalVista Pharmaceuticals Inc. (NASDAQ: KALV)
Sector: Healthcare • Biotechnology
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 KALV is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $15.50. This is marked in the chart below as a green color dotted line.
Daily chart – KALV
KALV – Symmetrical Triangle Pattern
#7 Telus Corp. (NYSE: TU)
Sector: Communication Services • Telecom Services
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 TU is if the stock breaks out of the downtrend channel and has a daily close above $16.50. This is marked in the chart below as a green color dotted line.
Daily chart – TU
TU – Downtrend Channel
#8 Dell Technologies Inc. (NYSE: DELL)
Sector: Technology • Computer Hardware
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 DELL is if the stock closes above the immediate resistance level of $119.00. This is marked in the chart below as a green color dotted line.
Daily chart – DELL
DELL – Symmetrical Triangle Pattern Breakout
#9 Tenaris S.A. ADR (NYSE: TS)
Sector: Energy • Oil & Gas Equipment & 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 TS is if the stock breaks out of the falling wedge pattern, at a price of around $30.50. This is marked in the chart below as a green color dotted line.
Daily chart – TS
TS – Falling Wedge Pattern
#10 Flutter Entertainment Plc (NYSE: FLUT)
Sector: Consumer Cyclical • Gambling
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 FLUT is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $214.50. This is marked in the chart below as a green color dotted line.
Daily chart – FLUT
FLUT – Symmetrical Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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