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 | Roper Technologies, Inc. | NYSE: ROP | $498.43 | $501.30 | Consolidation Area |
| 2 | Greenland Technologies Holding Corporation | NASDAQ: GTEC | $9.89 | $10.20 | Falling Wedge Pattern Breakout |
| 3 | Usio, Inc. | NASDAQ: USIO | $7.33 | $7.90 | Symmetrical Triangle Pattern Breakout |
| 4 | ZTO Express (Cayman) Inc. | NYSE: ZTO | $32.61 | $33.30 | Ascending Triangle Pattern |
| 5 | Innoviz Technologies Ltd. | NASDAQ: INVZ | $7.30 | $7.70 | Downtrend Channel Breakout |
| 6 | Kornit Digital Ltd. | NASDAQ: KRNT | $176.40 | $181.30 | Uptrend Channel |
| 7 | Mesa Laboratories, Inc. | NASDAQ: MLAB | $312.35 | $325.00 | Consolidation Area |
| 8 | SCYNEXIS, Inc. | NASDAQ: SCYX | $7.13 | 7.30 | Falling Wedge Pattern Breakout |
| 9 | ICU Medical, Inc. | NASDAQ: ICUI | $246.98 | $248.00 | Symmetrical Triangle Pattern Breakout |
| 10 | Veracyte, Inc. | NASDAQ: VCYT | $49.30 | $54.00 | Ascending 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 Roper Technologies, Inc. (NYSE: ROP)
Sector: Industrials | Specialty Industrial Machinery
Reason: Formation of a Consolidation Area
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 ROP is if the stock has a daily close above the breakout level of the consolidation area, at around $501.30. This is marked in the chart below as a green color dotted line.
Daily chart – ROP
ROP – Consolidation Area
#2 Greenland Technologies Holding Corporation (NASDAQ: GTEC)
Sector: Industrials | Specialty Industrial Machinery
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 GTEC is above the nearest resistance level of $10.20. This is marked in the chart below as a green color dotted line.
Daily chart – GTEC
GTEC – Falling Wedge Pattern Breakout
#3 Usio, Inc. (NASDAQ: USIO)
Sector: Technology | Software – Infrastructure
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 USIO is if the stock closes above the immediate resistance level of $7.90. This is marked in the chart below as a green color dotted line.
Daily chart – USIO
USIO – Symmetrical Triangle Pattern Breakout
#4 ZTO Express (Cayman) Inc. (NYSE: ZTO)
Sector: Industrials | Integrated Freight & Logistics
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 ZTO is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $33.30. This is marked in the chart below as a green color dotted line.
Daily chart – ZTO
ZTO – Ascending Triangle Pattern
#5 Innoviz Technologies Ltd. (NASDAQ: INVZ)
Sector: Consumer Cyclical | Auto Parts
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 currently broken out of the downtrend channel, the ideal buy level for INVZ is above the price of $7.70. This is marked in the chart below as a green color dotted line.
Daily chart – INVZ
INVZ – Downtrend Channel Breakout
#6 Kornit Digital Ltd. (NASDAQ: KRNT)
Sector: Industrials | Specialty Industrial Machinery
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 KRNT is if the stock has a daily close above the near-term resistance level of $181.30. This is marked in the chart below as a green color dotted line.
Daily chart – KRNT
KRNT – Uptrend Channel
#7 Mesa Laboratories, Inc. (NASDAQ: MLAB)
Sector: Technology | Scientific & Technical Instruments
Reason: Formation of a Consolidation Area
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 MLAB is if the stock has a daily close above the breakout level of the consolidation area, at around $325.00. This is marked in the chart below as a green color dotted line.
Daily chart – MLAB
MLAB – Consolidation Area
#8 SCYNEXIS, Inc. (NASDAQ: SCYX)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 SCYX is above the nearest resistance level of $7.30. This is marked in the chart below as a green color dotted line.
Daily chart – SCYX
SCYX – Falling Wedge Pattern Breakout
#9 ICU Medical, Inc. (NASDAQ: ICUI)
Sector: Healthcare | Medical Instruments & Supplies
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 ICUI is if the stock closes above the immediate resistance level of $248.00. This is marked in the chart below as a green color dotted line.
Daily chart – ICUI
ICUI – Symmetrical Triangle Pattern Breakout
#10 Veracyte, Inc. (NASDAQ: VCYT)
Sector: Healthcare | Biotechnology
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 VCYT is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $54.00. This is marked in the chart below as a green color dotted line.
Daily chart – VCYT
VCYT – Ascending Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day