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 | Horizon Therapeutics Public Limited Company | NASDAQ: HZNP | $62.97 | $67.00 | Falling Wedge Pattern |
| 2 | AbbVie Inc. | NYSE: ABBV | $143.06 | $146.00 | Flag Pattern Breakout |
| 3 | America Movil, S.A.B. de C.V. | NYSE: AMX | $17.49 | $17.80 | Downtrend Channel |
| 4 | Leslie’s, Inc. | NASDAQ: LESL | $13.45 | $14.40 | Falling Wedge Pattern |
| 5 | Eli Lilly and Company | NYSE: LLY | $311.46 | $315.50 | Symmetrical Triangle Pattern |
| 6 | Freshpet, Inc. | NASDAQ: FRPT | $45.37 | $46.80 | Falling Wedge Pattern Breakout |
| 7 | Maravai LifeSciences Holdings, Inc. | NASDAQ: MRVI | $25.82 | $26.80 | Downtrend Channel |
| 8 | Vertical Aerospace Ltd. | NYSE: EVTL | $8.28 | $8.50 | Symmetrical Triangle Pattern Breakout |
| 9 | Abercrombie & Fitch Co. | NYSE: ANF | $15.88 | $16.60 | Falling Wedge Pattern |
| 10 | Envista Holdings Corporation | NYSE: NVST | $34.67 | $38.40 | Downtrend Channel |
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 Horizon Therapeutics Public Limited Company (NASDAQ: HZNP)
Sector: Healthcare | Drug Manufacturers – General
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 HZNP is if the stock breaks out of the falling wedge pattern, at a price of around $67.00. This is marked in the chart below as a green color dotted line.
Daily chart – HZNP
HZNP – Falling Wedge Pattern
#2 AbbVie Inc. (NYSE: ABBV)
Sector: Healthcare | Drug Manufacturers – General
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 ABBV is above the near-term resistance level of $146.00. This is marked in the chart below as a green color dotted line.
Daily chart – ABBV
ABBV – Flag Pattern Breakout
#3 America Movil, S.A.B. de C.V. (NYSE: AMX)
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 AMX is if the stock breaks out of the downtrend channel and has a daily close above $17.80. This is marked in the chart below as a green color dotted line.
Daily chart – AMX
AMX – Downtrend Channel
#4 Leslie’s, Inc. (NASDAQ: LESL)
Sector: Consumer Cyclical | Home Improvement Retail
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 LESL is if the stock breaks out of the falling wedge pattern, at a price of around $14.40. This is marked in the chart below as a green color dotted line.
Daily chart – LESL
LESL – Falling Wedge Pattern
#5 Eli Lilly and Company (NYSE: LLY)
Sector: Healthcare | Drug Manufacturers – General
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 LLY is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $315.50. This is marked in the chart below as a green color dotted line.
Daily chart – LLY
LLY – Symmetrical Triangle Pattern
#6 Freshpet, Inc. (NASDAQ: FRPT)
Sector: Consumer Defensive | Packaged Foods
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 FRPT is above the nearest resistance level of $46.80. This is marked in the chart below as a green color dotted line.
Daily chart – FRPT
FRPT – Falling Wedge Pattern Breakout
#7 Maravai LifeSciences Holdings, Inc. (NASDAQ: MRVI)
Sector: Healthcare | Biotechnology
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 MRVI is if the stock breaks out of the downtrend channel and has a daily close above $26.80. This is marked in the chart below as a green color dotted line.
Daily chart – MRVI
MRVI – Downtrend Channel
#8 Vertical Aerospace Ltd. (NYSE: EVTL)
Sector: Industrials | Aerospace & Defense
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 EVTL is if the stock closes above the immediate resistance level of $8.50. This is marked in the chart below as a green color dotted line.
Daily chart – EVTL
EVTL – Symmetrical Triangle Pattern Breakout
#9 Abercrombie & Fitch Co. (NYSE: ANF)
Sector: Consumer Cyclical | Apparel Retail
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 ANF is if the stock breaks out of the falling wedge pattern, at a price of around $16.60. This is marked in the chart below as a green color dotted line.
Daily chart – ANF
ANF – Falling Wedge Pattern
#10 Envista Holdings Corporation (NYSE: NVST)
Sector: Healthcare | Medical Instruments & Supplies
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 NVST is if the stock breaks out of the downtrend channel and has a daily close above $38.40. This is marked in the chart below as a green color dotted line.
Daily chart – NVST
NVST – Downtrend Channel
Happy Trading!
Trades of The Day Research Team
The Greatest Options Strategy Ever Made [sponsor]This really is funny to me. When I describe trading options to my parents, I can see their eyes roll back in their head... To my parents and most of my friends, trading options is just way too confusing. If you think options trading is too complex, you need to have someone explain it to you simply and in plain English, that day is here. Click Here now to access the #1 options strategy for beginners.
Source: Trades of the Day