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 | Black Knight, Inc. | NYSE: BKI | $64.63 | $64.80 | Symmetrical Triangle Pattern Breakout |
| 2 | CF Industries Holdings, Inc. | NYSE: CF | $90.49 | $90.90 | Falling Wedge Pattern Breakout |
| 3 | Flowers Foods, Inc. | NYSE: FLO | $27.52 | $28.00 | Symmetrical Triangle Pattern |
| 4 | PayPal Holdings, Inc. | NASDAQ: PYPL | $80.80 | $87.20 | Downtrend Channel Breakout |
| 5 | Credo Technology Group Holding Ltd | NASDAQ: CRDO | $18.63 | $18.80 | Symmetrical Triangle Pattern Breakout |
| 6 | Cloudflare, Inc. | NYSE: NET | $60.10 | $64.50 | Falling Wedge Pattern Breakout |
| 7 | Borr Drilling Limited | NYSE: BORR | $6.71 | $6.80 | Symmetrical Triangle Pattern Breakout |
| 8 | WisdomTree, Inc. | NYSE: WT | $6.02 | $6.20 | Downtrend Channel Breakout |
| 9 | Corsair Gaming, Inc. | NASDAQ: CRSR | $16.91 | $17.10 | Symmetrical Triangle Pattern Breakout |
| 10 | PBF Energy Inc. | NYSE: PBF | $42.27 | $45.20 | Symmetrical 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 Black Knight, Inc. (NYSE: BKI)
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 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 BKI is if the stock closes above the immediate resistance level of $64.80. This is marked in the chart below as a green color dotted line.
Daily chart – BKI
BKI – Symmetrical Triangle Pattern Breakout
#2 CF Industries Holdings, Inc. (NYSE: CF)
Sector: Basic Materials | Agricultural Inputs
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 CF is above the nearest resistance level of $90.90. This is marked in the chart below as a green color dotted line.
Daily chart – CF
CF – Falling Wedge Pattern Breakout
#3 Flowers Foods, Inc. (NYSE: FLO)
Sector: Consumer Defensive | Packaged Foods
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 FLO is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $28.00. This is marked in the chart below as a green color dotted line.
Daily chart – FLO
FLO – Symmetrical Triangle Pattern
#4 PayPal Holdings, Inc. (NASDAQ: PYPL)
Sector: Financial | Credit Services
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 PYPL is if the stock has a daily close above $87.20. This is marked in the chart below as a green color dotted line.
Daily chart – PYPL
PYPL – Downtrend Channel Breakout
#5 Credo Technology Group Holding Ltd (NASDAQ: CRDO)
Sector: Technology | Communication Equipment
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 CRDO is if the stock closes above the immediate resistance level of $18.80. This is marked in the chart below as a green color dotted line.
Daily chart – CRDO
CRDO – Symmetrical Triangle Pattern Breakout
#6 Cloudflare, Inc. (NYSE: NET)
Sector: Technology | Software – Infrastructure
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 NET is above the nearest resistance level of $64.50. This is marked in the chart below as a green color dotted line.
Daily chart – NET
NET – Falling Wedge Pattern Breakout
#7 Borr Drilling Limited (NYSE: BORR)
Sector: Energy | Oil & Gas Drilling
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 BORR is if the stock closes above the immediate resistance level of $6.80. This is marked in the chart below as a green color dotted line.
Daily chart – BORR
BORR – Symmetrical Triangle Pattern Breakout
#8 WisdomTree, Inc. (NYSE: WT)
Sector: Financial | Asset Management
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 WT is if the stock has a daily close above $6.20. This is marked in the chart below as a green color dotted line.
Daily chart – WT
WT – Downtrend Channel Breakout
#9 Corsair Gaming, Inc. (NASDAQ: CRSR)
Sector: Technology | Computer Hardware
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 CRSR is if the stock closes above the immediate resistance level of $17.10. This is marked in the chart below as a green color dotted line.
Daily chart – CRSR
CRSR – Symmetrical Triangle Pattern Breakout
#10 PBF Energy Inc. (NYSE: PBF)
Sector: Energy | Oil & Gas Refining & Marketing
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 PBF is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $45.20. This is marked in the chart below as a green color dotted line.
Daily chart – PBF
PBF – Symmetrical Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day