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 | Franklin Resources, Inc. | NYSE: BEN | $31.49 | $32.40 | Symmetrical Triangle Pattern Breakout |
| 2 | Diginex Limited | NASDAQ: EQOS | $6.85 | $8.50 | Falling Wedge Pattern Breakout |
| 3 | Alphabet Inc. | NASDAQ: GOOG | $2965.41 | $2983.50 | Flag Pattern Breakout |
| 4 | Ocugen, Inc. | NASDAQ: OCGN | $11.84 | $13.20 | Symmetrical Triangle Pattern Breakout |
| 5 | Maxeon Solar Technologies, Ltd. | NASDAQ: MAXN | $22.53 | $25.00 | Double Bottom Pattern |
| 6 | Brookdale Senior Living Inc. | NYSE: BKD | $6.50 | $7.60 | Flag Pattern |
| 7 | Suncor Energy Inc. | NYSE: SU | $26.30 | $27.70 | Uptrend Channel |
| 8 | Chevron Corporation | NYSE: CVX | $114.49 | $115.30 | Ascending Triangle Pattern Breakout |
| 9 | United States Steel Corporation | NYSE: X | $26.39 | $30.90 | Double Bottom Pattern |
| 10 | Zillow Group, Inc. | NASDAQ: Z | $103.63 | $110.80 | 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 Franklin Resources, Inc. (NYSE: BEN)
Sector: Financial | Asset Management
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 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 stock has currently broken out of a symmetrical triangle pattern. However, the ideal buy level for BEN is if the stock closes above the immediate resistance level of $32.40. This is marked in the chart below as a green color dotted line.
Daily chart – BEN
BEN – Symmetrical Triangle Pattern Breakout
#2 Diginex Limited (NASDAQ: EQOS)
Sector: Financial | Capital Markets
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 EQOS is above the nearest resistance level of $8.50. This is marked in the chart below as a green color dotted line.
Daily chart – EQOS
EQOS – Falling Wedge Pattern Breakout
#3 Alphabet Inc. (NASDAQ: GOOG)
Sector: Communication Services | Internet Content & Information
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 GOOG is above the near-term resistance level of $2983.50. This is marked in the chart below as a green color dotted line.
Daily chart – GOOG
GOOG – Flag Pattern Breakout
#4 Ocugen, Inc. (NASDAQ: OCGN)
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 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 stock has currently broken out of a symmetrical triangle pattern. However, the ideal buy level for OCGN is if the stock closes above the immediate resistance level of $13.20. This is marked in the chart below as a green color dotted line.
Daily chart – OCGN
OCGN – Symmetrical Triangle Pattern Breakout
#5 Maxeon Solar Technologies, Ltd. (NASDAQ: MAXN)
Sector: Technology | Solar
Reason: Formation of a Double Bottom Pattern
A Double Bottom Pattern looks like the letter W and is characterized by two well-defined lows at approximately the same price level. This twice-touched low is usually a very strong support level. The high point between the two bottoms’ resistance level is called a neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
Buy Level(s): The ideal buy level for MAXN is above the neckline of the double bottom pattern, at around $25.00. This is marked in the chart below as a green color dotted line.
Daily chart – MAXN
MAXN – Double Bottom Pattern
#6 Brookdale Senior Living Inc. (NYSE: BKD)
Sector: Healthcare | Medical Care Facilities
Reason: Formation of 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): The ideal buy level for BKD is if the stock breaks out of the flag pattern, and closes above the near-term resistance level of around $7.60. This is marked in the chart below as a green color dotted line.
Daily chart – BKD
BKD – Flag Pattern
#7 Suncor Energy Inc. (NYSE: SU)
Sector: Energy | Oil & Gas Integrated
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 SU is if the stock breaks out of the uptrend channel and has a daily close above $27.70. This is marked in the chart below as a green color dotted line.
Daily chart – SU
SU – Uptrend Channel
#8 Chevron Corporation (NYSE: CVX)
Sector: Energy | Oil & Gas Integrated
Reason: Breakout From 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): Although the stock has broken out of the ascending triangle pattern, the ideal buy level for CVX is if the stock has a daily close above the near-term resistance level of $115.3d0. This is marked in the chart below as a green color dotted line.
Daily chart – CVX
CVX – Ascending Triangle Pattern Breakout
#9 United States Steel Corporation (NYSE: X)
Sector: Basic Materials | Steel
Reason: Formation of a Double Bottom Pattern
A Double Bottom Pattern looks like the letter W and is characterized by two well-defined lows at approximately the same price level. This twice-touched low is usually a very strong support level. The high point between the two bottoms’ resistance level is called a neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
Buy Level(s): The ideal buy level for X is above the neckline of the double bottom pattern, at around $30.90. This is marked in the chart below as a green color dotted line.
Daily chart – X
X – Double Bottom Pattern
#10 Zillow Group, Inc. (NASDAQ: Z)
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 Z is above the nearest resistance level of $110.80. This is marked in the chart below as a green color dotted line.
Daily chart – Z
Z – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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