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 | The Children’s Place, Inc. | NASDAQ: PLCE | $32.70 | $38.50 | Falling Wedge Pattern |
| 2 | Amazon.com, Inc. | NASDAQ: AMZN | $106.96 | $109.10 | Symmetrical Triangle Pattern Breakout |
| 3 | Restaurant Brands International Inc. | NYSE: QSR | $69.51 | $69.80 | Ascending Triangle Pattern Breakout |
| 4 | Fastenal Company | NASDAQ: FAST | $54.81 | $56.10 | Symmetrical Triangle Pattern |
| 5 | Axonics, Inc. | NASDAQ: AXNX | $60.21 | $60.80 | Downtrend Channel |
| 6 | Hims & Hers Health, Inc. | NYSE: HIMS | $11.68 | $12.00 | Symmetrical Triangle Pattern Breakout |
| 7 | SciPlay Corporation | NASDAQ: SCPL | $17.09 | $17.30 | Ascending Triangle Pattern |
| 8 | The Procter & Gamble Company | NYSE: PG | $156.07 | $157.30 | Symmetrical Triangle Pattern Breakout |
| 9 | Shockwave Medical, Inc. | NASDAQ: SWAV | $286.46 | $296.00 | Downtrend Channel Breakout |
| 10 | XPO, Inc. | NYSE: XPO | $44.02 | $44.30 | 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 The Children’s Place, Inc. (NASDAQ: PLCE)
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 PLCE is if the stock breaks out of the falling wedge pattern, at a price of around $38.50. This is marked in the chart below as a green color dotted line.
Daily chart – PLCE
PLCE – Falling Wedge Pattern
#2 Amazon.com, Inc. (NASDAQ: AMZN)
Sector: Consumer Cyclical | Internet Retail
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 AMZN is if the stock closes above the immediate resistance level of $109.10. This is marked in the chart below as a green color dotted line.
Daily chart – AMZN
AMZN – Symmetrical Triangle Pattern Breakout
#3 Restaurant Brands International Inc. (NYSE: QSR)
Sector: Consumer Cyclical | Restaurants
Reason: Breakout From an Ascending Triangle Pattern
An ascending triangle pattern is a bullish pattern formed by drawing a horizontal line along the swing highs, and a rising trendline along the swing lows. These two lines result in the formation of a triangle. A breakout from this pattern is typically a strong bullish indication.
Buy Level(s): Although the stock has broken out of the ascending triangle pattern, the ideal buy level for QSR is if the stock has a daily close above the near-term resistance level of $69.80. This is marked in the chart below as a green color dotted line.
Daily chart – QSR
QSR – Ascending Triangle Pattern Breakout
#4 Fastenal Company (NASDAQ: FAST)
Sector: Industrials | Industrial Distribution
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 FAST is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $56.10. This is marked in the chart below as a green color dotted line.
Daily chart – FAST
FAST – Symmetrical Triangle Pattern
#5 Axonics, Inc. (NASDAQ: AXNX)
Sector: Healthcare | Medical Devices
Reason: Downtrend Channel Pattern
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 ideal buy level for AXNX is if the stock breaks out of the downtrend channel and closes above the price of $60.80. This is marked in the chart below as a green color dotted line.
Daily chart – AXNX
AXNX – Downtrend Channel
#6 Hims & Hers Health, Inc. (NYSE: HIMS)
Sector: Consumer Defensive | Household & Personal Products
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 HIMS is if the stock closes above the immediate resistance level of $12.00. This is marked in the chart below as a green color dotted line.
Daily chart – HIMS
HIMS – Symmetrical Triangle Pattern Breakout
#7 SciPlay Corporation (NASDAQ: SCPL)
Sector: Communication Services | Electronic Gaming & Multimedia
Reason: Formation of an Ascending Triangle Pattern
An ascending triangle pattern is a bullish pattern formed by drawing a horizontal line along the swing highs, and a rising trendline along the swing lows. These two lines result in the formation of a triangle. A breakout from this pattern is typically a strong bullish indication.
Buy Level(s): The ideal buy level for SCPL is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $17.30. This is marked in the chart below as a green color dotted line.
Daily chart – SCPL
SCPL – Ascending Triangle Pattern
#8 The Procter & Gamble Company (NYSE: PG)
Sector: Consumer Defensive | Household & Personal Products
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 PG is if the stock closes above the immediate resistance level of $157.30. This is marked in the chart below as a green color dotted line.
Daily chart – PG
PG – Symmetrical Triangle Pattern Breakout
#9 Shockwave Medical, Inc. (NASDAQ: SWAV)
Sector: Healthcare | Medical Devices
Reason: Downtrend Channel Breakout
A downtrend or descending channel is the price action contained between downward sloping 0parallel 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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for SWAV is above the near-term resistance area, which translates to a price of around $296.00. This is marked in the chart below as a green color dotted line.
Daily chart – SWAV
SWAV – Downtrend Channel Breakout
#10 XPO, Inc. (NYSE: XPO)
Sector: Industrials | Trucking
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 XPO is if the stock closes above the immediate resistance level of $44.30. This is marked in the chart below as a green color dotted line.
Daily chart – XPO
XPO – Symmetrical Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day