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 | Option Care Health, Inc. | NASDAQ: OPCH | $33.17 | $33.40 | Symmetrical Triangle Pattern Breakout |
| 2 | CymaBay Therapeutics, Inc. | NASDAQ: CBAY | $8.59 | $8.70 | Flag Pattern Breakout |
| 3 | C3.ai, Inc. | NYSE: AI | $28.48 | $29.10 | Symmetrical Triangle Pattern Breakout |
| 4 | Comstock Resources, Inc. | NYSE: CRK | $13.17 | $13.70 | Falling Wedge Pattern Breakout |
| 5 | Diamondback Energy, Inc. | NASDAQ: FANG | $146.75 | $150.00 | Symmetrical Triangle Pattern |
| 6 | Samsara Inc. | NYSE: IOT | $19.48 | $19.80 | Double Bottom Pattern Breakout |
| 7 | Algoma Steel Group Inc. | NASDAQ: ASTL | $9.06 | $9.40 | Symmetrical Triangle Pattern Breakout |
| 8 | Magnolia Oil & Gas Corporation | NYSE: MGY | $23.24 | $23.60 | Symmetrical Triangle Pattern Breakout |
| 9 | Endeavor Group Holdings, Inc. | NYSE: EDR | $24.04 | $24.40 | Symmetrical Triangle Pattern Breakout |
| 10 | BWX Technologies, Inc. | NYSE: BWXT | $63.14 | $63.50 | Symmetrical Triangle 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 Option Care Health, Inc. (NASDAQ: OPCH)
Sector: Healthcare | Medical Care Facilities
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 OPCH is if the stock closes above the immediate resistance level of $33.40. This is marked in the chart below as a green color dotted line.
Daily chart – OPCH
OPCH – Symmetrical Triangle Pattern Breakout
#2 CymaBay Therapeutics, Inc. (NASDAQ: CBAY)
Sector: Healthcare | Biotechnology
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 CBAY is above the near-term resistance level of $8.70. This is marked in the chart below as a green color dotted line.
Daily chart – CBAY
CBAY – Flag Pattern Breakout
#3 C3.ai, Inc. (NYSE: AI)
Sector: Technology | Software – Application
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 AI is if the stock closes above the immediate resistance level of $29.10. This is marked in the chart below as a green color dotted line.
Daily chart – AI
AI – Symmetrical Triangle Pattern Breakout
#4 Comstock Resources, Inc. (NYSE: CRK)
Sector: Energy | Oil & Gas E&P
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 CRK is above the nearest resistance level of $13.70. This is marked in the chart below as a green color dotted line.
Daily chart – CRK
CRK – Falling Wedge Pattern Breakout
#5 Diamondback Energy, Inc. (NASDAQ: FANG)
Sector: Energy | Oil & Gas E&P
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 FANG is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $150.00. This is marked in the chart below as a green color dotted line.
Daily chart – FANG
FANG – Symmetrical Triangle Pattern
#6 Samsara Inc. (NYSE: IOT)
Sector: Technology | Software – Infrastructure
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 IOT is above the near-term resistance level of around $19.80. This is marked in the chart below as a green color dotted line.
Daily chart – IOT
IOT – Double Bottom Pattern Breakout
#7 Algoma Steel Group Inc. (NASDAQ: ASTL)
Sector: Basic Materials | Steel
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 ASTL is if the stock closes above the immediate resistance level of $9.40. This is marked in the chart below as a green color dotted line.
Daily chart – ASTL
ASTL – Symmetrical Triangle Pattern Breakout
#8 Magnolia Oil & Gas Corporation (NYSE: MGY)
Sector: Energy | Oil & Gas E&P
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 MGY is if the stock closes above the immediate resistance level of $23.60. This is marked in the chart below as a green color dotted line.
Daily chart – MGY
MGY – Symmetrical Triangle Pattern Breakout
#9 Endeavor Group Holdings, Inc. (NYSE: EDR)
Sector: Communication Services | Entertainment
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 EDR is if the stock closes above the immediate resistance level of $24.40. This is marked in the chart below as a green color dotted line.
Daily chart – EDR
EDR – Symmetrical Triangle Pattern Breakout
#10 BWX Technologies, Inc. (NYSE: BWXT)
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 BWXT is if the stock closes above the immediate resistance level of $63.50. This is marked in the chart below as a green color dotted line.
Daily chart – BWXT
BWXT – Symmetrical Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day