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 | Starbucks Corporation | NASDAQ: SBUX | $102.82 | $103.80 | Symmetrical Triangle Pattern Breakout |
| 2 | Amgen Inc. | NASDAQ: AMGN | $234.82 | $237.00 | Falling Wedge Pattern Breakout |
| 3 | Texas Instruments Incorporated | NASDAQ: TXN | $184.32 | $185.60 | Ascending Triangle Pattern |
| 4 | Avantor, Inc. | NYSE: AVTR | $23.00 | $23.10 | Falling Wedge Pattern Breakout |
| 5 | Equity LifeStyle Properties, Inc. | NYSE: ELS | $72.00 | $72.60 | Symmetrical Triangle Pattern Breakout |
| 6 | Digital World Acquisition Corp. | NASDAQ: DWAC | $20.08 | $20.60 | Falling Wedge Pattern Breakout |
| 7 | Ardmore Shipping Corporation | NYSE: ASC | $12.18 | $13.10 | Flag Pattern |
| 8 | Repligen Corporation | NASDAQ: RGEN | $175.34 | $177.20 | Falling Wedge Pattern Breakout |
| 9 | Centene Corporation | NYSE: CNC | $70.63 | $71.50 | Breakout From Consolidation Area |
| 10 | Autoliv, Inc. | NYSE: ALV | $102.78 | $103.50 | 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 Starbucks Corporation (NASDAQ: SBUX)
Sector: Consumer Cyclical | Restaurants
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 SBUX is if the stock closes above the immediate resistance level of $103.80. This is marked in the chart below as a green color dotted line.
Daily chart – SBUX
SBUX – Symmetrical Triangle Pattern Breakout
#2 Amgen Inc. (NASDAQ: AMGN)
Sector: Healthcare | Drug Manufacturers – General
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 AMGN is above the nearest resistance level of $237.00. This is marked in the chart below as a green color dotted line.
Daily chart – AMGN
AMGN – Falling Wedge Pattern Breakout
#3 Texas Instruments Incorporated (NASDAQ: TXN)
Sector: Technology | Semiconductors
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 TXN is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $185.60. This is marked in the chart below as a green color dotted line.
Daily chart – TXN
TXN – Ascending Triangle Pattern
#4 Avantor, Inc. (NYSE: AVTR)
Sector: Basic Materials | Specialty Chemicals
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 AVTR is above the nearest resistance level of $23.10. This is marked in the chart below as a green color dotted line.
Daily chart – AVTR
AVTR – Falling Wedge Pattern Breakout
#5 Equity LifeStyle Properties, Inc. (NYSE: ELS)
Sector: Real Estate | REIT – Residential
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 ELS is if the stock closes above the immediate resistance level of $72.60. This is marked in the chart below as a green color dotted line.
Daily chart – ELS
ELS – Symmetrical Triangle Pattern Breakout
#6 Digital World Acquisition Corp. (NASDAQ: DWAC)
Sector: Financial | Shell Companies
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 DWAC is above the nearest resistance level of $20.60. This is marked in the chart below as a green color dotted line.
Daily chart – DWAC
DWAC – Falling Wedge Pattern Breakout
#7 Ardmore Shipping Corporation (NYSE: ASC)
Sector: Industrials | Marine Shipping
Reason: Formation of 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): The ideal buy level for ASC is if the stock breaks out of the flag pattern, at around $13.10. This is marked in the chart below as a green color dotted line.
Daily chart – ASC
ASC – Flag Pattern
#8 Repligen Corporation (NASDAQ: RGEN)
Sector: Healthcare | Medical Instruments & Supplies
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 RGEN is above the nearest resistance level of $177.20. This is marked in the chart below as a green color dotted line.
Daily chart – RGEN
RGEN – Falling Wedge Pattern Breakout
#9 Centene Corporation (NYSE: CNC)
Sector: Healthcare | Healthcare Plans
Reason: Breakout From a Consolidation Area in the Daily Chart
A Consolidation Area is a price action contained between two parallel lines. It is formed by a lower line that connects the lows, and an upper line that joins the highs. A stock usually trades between the two lines of the consolidation area before finally breaking out from the upper rail.
Buy Level(s): Although the stock has currently broken out of a consolidation area, the ideal buy level for CNC is above the near-term resistance area, which translates to a price of around $71.50. This is marked in the chart below as a green color dotted line.
Daily chart – CNC
CNC – Breakout From Consolidation Area
#10 Autoliv, Inc. (NYSE: ALV)
Sector: Consumer Cyclical | Auto Parts
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 ALV is if the stock closes above the immediate resistance level of $103.50. This is marked in the chart below as a green color dotted line.
Daily chart – ALV
ALV – Symmetrical Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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