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 | Carnival Corporation & plc | NYSE: CCL | $10.85 | $11.70 | Falling Wedge Pattern |
| 2 | AppLovin Corporation | NASDAQ: APP | $39.63 | $44.20 | Downtrend Channel Breakout |
| 3 | Lamb Weston Holdings, Inc. | NYSE: LW | $71.91 | $73.30 | Ascending Triangle Pattern Breakout |
| 4 | SentinelOne, Inc. | NYSE: S | $26.49 | $29.00 | Falling Wedge Pattern Breakout |
| 5 | JFrog Ltd. | NASDAQ: FROG | $23.17 | $23.90 | Downtrend Channel Breakout |
| 6 | Confluent, Inc. | NASDAQ: CFLT | $25.28 | $28.50 | Falling Wedge Pattern |
| 7 | UiPath Inc. | NYSE: PATH | $21.92 | $23.80 | Downtrend Channel Breakout |
| 8 | Doximity, Inc. | NYSE: DOCS | $41.50 | $41.80 | Falling Wedge Pattern Breakout |
| 9 | Smith & Wesson Brands, Inc. | NASDAQ: SWBI | $16.44 | $16.90 | Downtrend Channel Breakout |
| 10 | ZoomInfo Technologies Inc. | NASDAQ: ZI | $37.71 | $40.00 | Falling Wedge 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 Carnival Corporation & plc (NYSE: CCL)
Sector: Consumer Cyclical | Travel Services
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 CCL is if the stock breaks out of the falling wedge pattern, at a price of around $11.70. This is marked in the chart below as a green color dotted line.
Daily chart – CCL
CCL – Falling Wedge Pattern
#2 AppLovin Corporation (NASDAQ: APP)
Sector: Technology | Software – Application
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 APP is if the stock has a daily close above $44.20. This is marked in the chart below as a green color dotted line.
Daily chart – APP
APP – Downtrend Channel Breakout
#3 Lamb Weston Holdings, Inc. (NYSE: LW)
Sector: Consumer Defensive | Packaged Foods
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 LW is if the stock has a daily close above the near-term resistance level of $73.30. This is marked in the chart below as a green color dotted line.
Daily chart – LW
LW – Ascending Triangle Pattern Breakout
#4 SentinelOne, Inc. (NYSE: S)
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 S is above the nearest resistance level of $29.00. This is marked in the chart below as a green color dotted line.
Daily chart – S
S – Falling Wedge Pattern Breakout
#5 JFrog Ltd. (NASDAQ: FROG)
Sector: Technology | Software – Application
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 FROG is if the stock has a daily close above $23.90. This is marked in the chart below as a green color dotted line.
Daily chart – FROG
FROG – Downtrend Channel Breakout
#6 Confluent, Inc. (NASDAQ: CFLT)
Sector: Technology | Software – Infrastructure
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 CFLT is if the stock breaks out of the falling wedge pattern, at a price of around $28.50. This is marked in the chart below as a green color dotted line.
Daily chart – CFLT
CFLT – Falling Wedge Pattern
#7 UiPath Inc. (NYSE: PATH)
Sector: Technology | Software – Infrastructure
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 PATH is if the stock has a daily close above $23.80. This is marked in the chart below as a green color dotted line.
Daily chart – PATH
PATH – Downtrend Channel Breakout
#8 Doximity, Inc. (NYSE: DOCS)
Sector: Healthcare | Health Information 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 DOCS is above the nearest resistance level of $41.80. This is marked in the chart below as a green color dotted line.
Daily chart – DOCS
DOCS – Falling Wedge 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 $16.90. This is marked in the chart below as a green color dotted line.
Daily chart – SWBI
SWBI – Downtrend Channel Breakout
#10 ZoomInfo Technologies Inc. (NASDAQ: ZI)
Sector: Technology | Software – Application
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 ZI is above the nearest resistance level of $40.00. This is marked in the chart below as a green color dotted line.
Daily chart – ZI
ZI – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day