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 | IonQ, Inc. | NYSE: IONQ | $6.15 | $6.40 | Symmetrical Triangle Pattern Breakout |
| 2 | Datadog, Inc. | NASDAQ: DDOG | $72.66 | $80.50 | Falling Wedge Pattern |
| 3 | UiPath Inc. | NYSE: PATH | $17.56 | $18.10 | Symmetrical Triangle Pattern Breakout |
| 4 | Five9, Inc. | NASDAQ: FIVN | $72.29 | $74.00 | Symmetrical Triangle Pattern |
| 5 | Guardforce AI Co., Limited | NASDAQ: GFAI | $7.08 | $8.80 | Falling Wedge Pattern Breakout |
| 6 | ServiceNow, Inc. | NYSE: NOW | $464.72 | $480.00 | Symmetrical Triangle Pattern |
| 7 | Hasbro, Inc. | NASDAQ: HAS | $53.69 | $54.40 | Falling Wedge Pattern |
| 8 | Redfin Corporation | NASDAQ: RDFN | $9.06 | $9.50 | Symmetrical Triangle Pattern Breakout |
| 9 | Smith & Wesson Brands, Inc. | NASDAQ: SWBI | $12.31 | $13.00 | Downtrend Channel Breakout |
| 10 | SentinelOne, Inc. | NYSE: S | $16.36 | $17.00 | 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 IonQ, Inc. (NYSE: IONQ)
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 IONQ is if the stock closes above the immediate resistance level of $6.40. This is marked in the chart below as a green color dotted line.
Daily chart – IONQ
IONQ – Symmetrical Triangle Pattern Breakout
#2 Datadog, Inc. (NASDAQ: DDOG)
Sector: Technology | Software – Application
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 DDOG is if the stock breaks out of the falling wedge pattern, at a price of around $80.50. This is marked in the chart below as a green color dotted line.
Daily chart – DDOG
DDOG – Falling Wedge Pattern
#3 UiPath Inc. (NYSE: PATH)
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 PATH is if the stock closes above the immediate resistance level of $18.10. This is marked in the chart below as a green color dotted line.
Daily chart – PATH
PATH – Symmetrical Triangle Pattern Breakout
#4 Five9, Inc. (NASDAQ: FIVN)
Sector: Technology | Software – Infrastructure
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 FIVN is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $74.00. This is marked in the chart below as a green color dotted line.
Daily chart – FIVN
FIVN – Symmetrical Triangle Pattern
#5 Guardforce AI Co., Limited (NASDAQ: GFAI)
Sector: Industrials | Security & Protection Services
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 GFAI is above the nearest resistance level of $8.80. This is marked in the chart below as a green color dotted line.
Daily chart – GFAI
GFAI – Falling Wedge Pattern Breakout
#6 ServiceNow, Inc. (NYSE: NOW)
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 NOW is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $480.00. This is marked in the chart below as a green color dotted line.
Daily chart – NOW
NOW – Symmetrical Triangle Pattern
#7 Hasbro, Inc. (NASDAQ: HAS)
Sector: Consumer Cyclical | Leisure
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 HAS is if the stock breaks out of the falling wedge pattern, at a price of around $54.40. This is marked in the chart below as a green color dotted line.
Daily chart – HAS
HAS – Falling Wedge Pattern
#8 Redfin Corporation (NASDAQ: RDFN)
Sector: Real Estate | Real Estate Services
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 RDFN is if the stock closes above the immediate resistance level of $9.50. This is marked in the chart below as a green color dotted line.
Daily chart – RDFN
RDFN – Symmetrical Triangle Pattern Breakout
#9 Smith & Wesson Brands, Inc. (NASDAQ: SWBI)
Sector: Industrials | Aerospace & Defense
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 SWBI is if the stock has a daily close above $13.00. This is marked in the chart below as a green color dotted line.
Daily chart – SWBI
SWBI – Downtrend Channel Breakout
#10 SentinelOne, Inc. (NYSE: S)
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 S is if the stock closes above the immediate resistance level of $17.00. This is marked in the chart below as a green color dotted line.
Daily chart – S
S – Symmetrical Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day