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 | HP Inc. | NYSE: HPQ | $30.15 | $31.00 | Downtrend Channel Breakout |
| 2 | uniQure N.V. | NASDAQ: QURE | $26.90 | $28.00 | Symmetrical Triangle Pattern Breakout |
| 3 | Silvergate Capital Corporation | NYSE: SI | $29.14 | $32.90 | Falling Wedge Pattern |
| 4 | Hilton Grand Vacations Inc. | NYSE: HGV | $43.12 | $44.40 | Downtrend Channel |
| 5 | Freshworks Inc. | NASDAQ: FRSH | $14.00 | $14.90 | Symmetrical Triangle Pattern |
| 6 | Celsius Holdings, Inc. | NASDAQ: CELH | $109.24 | $111.50 | Flag Pattern Breakout |
| 7 | PetIQ, Inc. | NASDAQ: PETQ | $11.54 | $11.80 | Downtrend Channel |
| 8 | Manchester United plc | NYSE: MANU | $21.21 | $21.70 | Symmetrical Triangle Pattern Breakout |
| 9 | Victoria’s Secret & Co. | NYSE: VSCO | $47.40 | $48.00 | Double Bottom Pattern Breakout |
| 10 | Perimeter Solutions, SA | NYSE: PRM | $10.63 | $11.00 | Downtrend Channel 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 HP Inc. (NYSE: HPQ)
Sector: Technology | Computer Hardware
Reason: Downtrend Channel Breakout
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 has currently broken out of a downtrend channel. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for HPQ is if the stock has a daily close above $31.00. This is marked in the chart below as a green color dotted line.
Daily chart – HPQ
HPQ – Downtrend Channel Breakout
#2 uniQure N.V. (NASDAQ: QURE)
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 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 QURE is if the stock closes above the immediate resistance level of $28.00. This is marked in the chart below as a green color dotted line.
Daily chart – QURE
QURE – Symmetrical Triangle Pattern Breakout
#3 Silvergate Capital Corporation (NYSE: SI)
Sector: Financial | Banks – Regional
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 SI is at a price of around $32.90. This is marked in the chart below as a green color dotted line.
Daily chart – SI
SI – Falling Wedge Pattern
#4 Hilton Grand Vacations Inc. (NYSE: HGV)
Sector: Consumer Cyclical | Resorts & Casinos
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 HGV is if the stock breaks out of the downtrend channel and has a daily close above $44.40. This is marked in the chart below as a green color dotted line.
Daily chart – HGV
HGV – Downtrend Channel
#5 Freshworks Inc. (NASDAQ: FRSH)
Sector: Technology | Software – Application
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 FRSH is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $14.90. This is marked in the chart below as a green color dotted line.
Daily chart – FRSH
FRSH – Symmetrical Triangle Pattern
#6 Celsius Holdings, Inc. (NASDAQ: CELH)
Sector: Consumer Defensive | Beverages – Non-Alcoholic
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 CELH is above the near-term resistance level of $111.50. This is marked in the chart below as a green color dotted line.
Daily chart – CELH
CELH – Flag Pattern Breakout
#7 PetIQ, Inc. (NASDAQ: PETQ)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 PETQ is if the stock breaks out of the downtrend channel and has a daily close above $11.80. This is marked in the chart below as a green color dotted line.
Daily chart – PETQ
PETQ – Downtrend Channel
#8 Manchester United plc (NYSE: MANU)
Sector: Consumer Cyclical | Leisure
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 MANU is if the stock closes above the immediate resistance level of $21.70. This is marked in the chart below as a green color dotted line.
Daily chart – MANU
MANU – Symmetrical Triangle Pattern Breakout
#9 Victoria’s Secret & Co. (NYSE: VSCO)
Sector: Consumer Cyclical | Apparel Retail
Reason: Breakout From 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 the neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
Buy Level(s): The stock has currently broken out of the double bottom pattern. However, the ideal buy level for VSCO is above the near-term resistance level of around $48.00. This is marked in the chart below as a green color dotted line.
Daily chart – VSCO
VSCO – Double Bottom Pattern Breakout
#10 Perimeter Solutions, SA (NYSE: PRM)
Sector: Basic Materials | Specialty Chemicals
Reason: Downtrend Channel Breakout
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 has currently broken out of a downtrend channel. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for PRM is if the stock has a daily close above $11.00. This is marked in the chart below as a green color dotted line.
Daily chart – PRM
PRM – Downtrend Channel Breakout
Happy Trading!
Trades of The Day Research Team
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