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, here are 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 | Kirkland’s, Inc. | NASDAQ: KIRK | $23.39 | $24.00 | Falling Wedge Pattern Breakout |
| 2 | nCino, Inc. | NASDAQ: NCNO | $74.63 | $76.50 | Symmetrical Triangle Pattern Breakout |
| 3 | DocuSign, Inc. | NASDAQ: DOCU | $310.05 | $12.70 | Ascending Triangle Pattern |
| 4 | Digital Turbine, Inc. | NASDAQ: APPS | $63.89 | $80.20 | Downtrend Channel |
| 5 | PagerDuty, Inc. | NYSE: PD | $47.38 | $49.50 | Breakout From Consolidation Area |
| 6 | Social Capital Hedosophia Holdings Corp. VI | NYSE: IPOF | $10.40 | $11.15 | Falling Wedge Pattern Breakout |
| 7 | Lithium Americas Corp. | NYSE: LAC | $22.13 | $23.00 | Symmetrical Triangle Pattern Breakout |
| 8 | AvePoint, Inc. | NASDAQ: AVPT | $10.68 | $12.30 | Downtrend Channel |
| 9 | Matterport, Inc. | NASDAQ: MTTR | $17.96 | $18.20 | Breakout From Consolidation Area |
| 10 | Taboola.com, Ltd. | NASDAQ: TBLA | $8.99 | $11.10 | 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 Kirkland’s, Inc. (NASDAQ: KIRK)
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 KIRK is above the nearest resistance level of $24.00. This is marked in the chart below as a green color dotted line.
Daily chart – KIRK
KIRK – Falling Wedge Pattern Breakout
#2 nCino, Inc. (NASDAQ: NCNO)
Sector: Technology | Software – Application
Reason: Breakout from 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 daily chart shows that the stock has currently broken out of a symmetrical triangle pattern. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for NCNO is if the stock has a daily close above $76.50. This is marked in the chart below as a green color dotted line.
Daily chart – NCNO
NCNO – Symmetrical Triangle Pattern Breakout
#3 DocuSign, Inc. (NASDAQ: DOCU)
Sector: Technology | Software – Application
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 DOCU is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $312.70. This is marked in the chart below as a green color dotted line.
Daily chart – DOCU
DOCU – Ascending Triangle Pattern
#4 Digital Turbine, Inc. (NASDAQ: APPS)
Sector: Technology | Software – Application
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 ideal buy level for APPS is if the stock has a daily close above the breakout level of the downtrend channel and closes above the near-term resistance level of $80.20. This is marked in the chart below as a green color dotted line.
Daily chart – APPS
APPS – Downtrend Channel
#5 PagerDuty, Inc. (NYSE: PD)
Sector: Technology | Software – Application
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 PD is above the near-term resistance area, which translates to a price of around $49.50. This is marked in the chart below as a green color dotted line.
Daily chart – PD
PD – Breakout From Consolidation Area
#6 Social Capital Hedosophia Holdings Corp. VI (NYSE: IPOF)
Sector: Financial | Shell Companies
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 IPOF is above the nearest resistance level of $11.15. This is marked in the chart below as a green color dotted line.
Daily chart – IPOF
IPOF – Falling Wedge Pattern Breakout
#7 Lithium Americas Corp. (NYSE: LAC)
Sector: Basic Materials | Other Industrial Metals & Mining
Reason: Breakout from 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 daily chart shows that the stock has currently broken out of a symmetrical triangle pattern. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for LAC is if the stock has a daily close above $23.00. This is marked in the chart below as a green color dotted line.
Daily chart – LAC
LAC – Symmetrical Triangle Pattern Breakout
#8 AvePoint, Inc. (NASDAQ: AVPT)
Sector: Technology | Software – Infrastructure
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 ideal buy level for AVPT is if the stock has a daily close above the breakout level of the downtrend channel and closes above the near-term resistance level of $12.30. This is marked in the chart below as a green color dotted line.
Daily chart – AVPT
AVPT – Downtrend Channel
#9 Matterport, Inc. (NASDAQ: MTTR)
Sector: Technology | Software – Application
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 MTTR is above the near-term resistance area, which translates to a price of around $18.20. This is marked in the chart below as a green color dotted line.
Daily chart – MTTR
MTTR – Breakout From Consolidation Area
#10 Taboola.com, Ltd. (NASDAQ: TBLA)
Sector: Communication Services | Internet Content & Information
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 TBLA is above the nearest resistance level of $11.10. This is marked in the chart below as a green color dotted line.
Daily chart – TBLA
TBLA – Falling Wedge Pattern Breakout
Happy Trading!
— Trades of The Day Research Team
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Source: Trades of the Day