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 | AbCellera Biologics Inc. | NASDAQ: ABCL | $7.90 | $8.40 | Falling Wedge Pattern Breakout |
| 2 | Crescent Point Energy Corp. | NYSE: CPG | $7.58 | $8.00 | Consolidation Area |
| 3 | DigitalOcean Holdings, Inc. | NYSE: DOCN | $42.66 | $45.30 | Falling Wedge Pattern Breakout |
| 4 | CVB Financial Corp. | NASDAQ: CVBF | $23.88 | $24.20 | Ascending Triangle Pattern |
| 5 | Emergent BioSolutions Inc. | NYSE: EBS | $35.33 | $39.60 | Falling Wedge Pattern |
| 6 | Quest Diagnostics Incorporated | NYSE: DGX | $141.03 | $142.10 | Symmetrical Triangle Pattern Breakout |
| 7 | Golden Ocean Group Limited | NASDAQ: GOGL | $15.56 | $16.00 | Uptrend Channel Breakout |
| 8 | Roblox Corporation | NYSE: RBLX | $31.60 | $36.40 | Falling Wedge Pattern Breakout |
| 9 | Pfizer Inc. | NYSE: PFE | $52.47 | $53.20 | Symmetrical Triangle Pattern |
| 10 | American Axle & Manufacturing Holdings, Inc. | NYSE: AXL | $6.75 | $7.30 | Falling Wedge 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 AbCellera Biologics Inc. (NASDAQ: ABCL)
Sector: Healthcare | Biotechnology
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 ABCL is above the nearest resistance level of $8.40. This is marked in the chart below as a green color dotted line.
Daily chart – ABCL
ABCL – Falling Wedge Pattern Breakout
#2 Crescent Point Energy Corp. (NYSE: CPG)
Sector: Energy | Oil & Gas E&P
Reason: Formation of 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): The ideal buy level for CPG is above the breakout level of the consolidation area, at around $8.00. This is marked in the chart below as a green color dotted line.
Daily chart – CPG
CPG – Consolidation Area
#3 DigitalOcean Holdings, Inc. (NYSE: DOCN)
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 DOCN is above the nearest resistance level of $45.30. This is marked in the chart below as a green color dotted line.
Daily chart – DOCN
DOCN – Falling Wedge Pattern Breakout
#4 CVB Financial Corp. (NASDAQ: CVBF)
Sector: Financial | Banks – Regional
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 CVBF is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $24.20. This is marked in the chart below as a green color dotted line.
Daily chart – CVBF
CVBF – Ascending Triangle Pattern_
#5 Emergent BioSolutions Inc. (NYSE: EBS)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 EBS is if the stock breaks out of the falling wedge pattern, at a price of around $39.60. This is marked in the chart below as a green color dotted line.
Daily chart – EBS
EBS – Falling Wedge Pattern
#6 Quest Diagnostics Incorporated (NYSE: DGX)
Sector: Healthcare | Diagnostics & Research
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 an 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 DGX is if the stock closes above the immediate resistance level of $142.10. This is marked in the chart below as a green color dotted line.
Daily chart – DGX
DGX – Symmetrical Triangle Pattern Breakout
#7 Golden Ocean Group Limited (NASDAQ: GOGL)
Sector: Industrials | Marine Shipping
Reason: Breakout From an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The stock has currently broken out of the uptrend channel. However, the ideal buy level for GOGL is if the stock has a daily close above the near-term resistance level of $16.00. This is marked in the chart below as a green color dotted line.
Daily chart – GOGL
GOGL – Uptrend Channel Breakout
#8 Roblox Corporation (NYSE: RBLX)
Sector: Communication Services | Electronic Gaming & Multimedia
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 RBLX is above the nearest resistance level of $36.40. This is marked in the chart below as a green color dotted line.
Daily chart – RBLX
RBLX – Falling Wedge Pattern Breakout
#9 Pfizer Inc. (NYSE: PFE)
Sector: Healthcare | Drug Manufacturers – General
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 an 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 PFE is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $53.20. This is marked in the chart below as a green color dotted line.
Daily chart – PFE
PFE – Symmetrical Triangle Pattern
#10 American Axle & Manufacturing Holdings, Inc. (NYSE: AXL)
Sector: Consumer Cyclical | Auto Parts
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 AXL is if the stock breaks out of the falling wedge pattern, at a price of around $7.30. This is marked in the chart below as a green color dotted line.
Daily chart – AXL
AXL – Falling Wedge Pattern
Happy Trading!
Trades of The Day Research Team
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