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 | Micron Technology, Inc. | NASDAQ: MU | $92.41 | $96.00 | Flag Pattern |
| 2 | Gerdau S.A. | NYSE: GGB | $5.11 | $5.50 | Symmetrical Triangle Pattern Breakout |
| 3 | Chargepoint Holdings Inc. | NYSE: CHPT | $29.84 | $35.00 | Downtrend Channel |
| 4 | Thunder Bridge Acquisition II, Ltd. | NASDAQ: THBR | $10.91 | $12.00 | Falling Wedge Pattern |
| 5 | Meridian Bioscience, Inc. | NASDAQ: VIVO | $28.30 | $33.00 | Cup and Handle Pattern |
| 6 | Avalara, Inc. | NYSE: AVLR | $139.71 | $143.00 | Falling Wedge Pattern |
| 7 | ASML Holding N.V. | NASDAQ: ASML | $637.10 | $645.00 | Inverted Head and Shoulders Pattern |
| 8 | Greenlane Holdings, Inc. | NASDAQ: GNLN | $6.20 | $6.30 | Falling Wedge Pattern Breakout |
| 9 | The Bank of Nova Scotia | NYSE: BNS | $62.95 | $65.00 | Rising Wedge Pattern |
| 10 | UP Fintech Holding Limited | NASDAQ: TIGR | $17.58 | $23.70 | 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 Micron Technology, Inc. (NASDAQ: MU)
Sector: Technology | Semiconductors
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 MU is if the stock has a daily close above the breakout level of the flag pattern, at around $96.00. This is marked in the chart below as a green color dotted line.
Daily chart – MU
MU – Flag Pattern
#2 Gerdau S.A. (NYSE: GGB)
Sector: Basic Materials | Steel
Reason: Breakout From 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): Although the stock has broken out of the symmetrical triangle pattern, the ideal buy level for GGB is if the stock has a daily close above the near-term resistance level of $5.50. This is marked in the chart below as a green color dotted line.
Daily chart – GGB
GGB – Symmetrical Triangle Pattern Breakout
#3 Chargepoint Holdings Inc. (NYSE: CHPT)
Sector: Consumer Cyclical | Specialty Retail
Reason: Formation of a Downtrend Channel
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 CHPT is if the stock has a daily close above the breakout level of the downtrend channel and closes above the near-term resistance level of $35.00. This is marked in the chart below as a green color dotted line.
Daily chart – CHPT
CHPT – Downtrend Channel
#4 Thunder Bridge Acquisition II, Ltd. (NASDAQ: THBR)
Sector: Financial | Shell Companies
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 THBR is if the stock breaks out of the falling wedge pattern as well as closes above the immediate resistance level of $12.00. This is marked in the chart below as a green color dotted line.
Daily chart – THBR
THBR – Falling Wedge Pattern
#5 Meridian Bioscience, Inc. (NASDAQ: VIVO)
Sector: Healthcare | Diagnostics & Research
Reason: Formation of a Cup and Handle Pattern in Weekly Chart
A Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. A Cup and Handle pattern is formed when the price initially declines, then levels off, and begins to rise again, forming a rounded cup-like structure. The handle is then formed near the rim or lip of the cup, either sideways or declining price channel. A breakout from a cup and handle pattern is a strong bullish indication as it signifies the start of a new bullish trend.
Buy Level(s): The ideal buy level for VIVO is if the stock has a daily close above the breakout level of the cup and handle pattern, at around $33.00. This is marked in the chart below as a green color dotted line.
Daily chart – VIVO
VIVO – Cup and Handle Pattern
#6 Avalara, Inc. (NYSE: AVLR)
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 AVLR is if the stock breaks out of the falling wedge pattern, at around $143.00. This is marked in the chart below as a green color dotted line.
Daily chart – AVLR
AVLR – Falling Wedge Pattern
#7 ASML Holding N.V. (NASDAQ: ASML)
Sector: Technology | Semiconductor Equipment & Materials
Reason: Formation of an Inverted Head and Shoulders (IH&S) Pattern
An inverse head and shoulders pattern signifies the reversal of a downward trend. The pattern is formed when the price falls to a trough and then rises; then falls below the former trough and then rises again; and finally, the price falls again but not as far as the second trough and then rises again. The neckline of this pattern would be the resistance found near the top of the previous troughs. Once a breakout from this pattern occurs, it signifies a bullish trend.
Buy Level(s): The ideal buy level for ASML is if the stock has a daily close above the breakout level of the IH&S pattern, at around $645.00. This is marked in the chart below as a green color dotted line.
Daily chart – ASML
ASML – Inverted Head and Shoulders Pattern
#8 Greenlane Holdings, Inc. (NASDAQ: GNLN)
Sector: Healthcare | Pharmaceutical Retailers
Reason: Breakout From 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): Even though the stock has broken out of a falling wedge pattern, the ideal buy level for GNLN is above the immediate resistance level of $6.30. This is marked in the chart below as a green color dotted line.
Daily chart – GNLN
GNLN – Falling Wedge Pattern Breakout
#9 The Bank of Nova Scotia (NYSE: BNS)
Sector: Financial | Banks – Diversified
Reason: Formation of a Rising Wedge Pattern
A rising wedge pattern is formed by the two converging trend lines when the price of the stock rises over a certain time period. This is typically considered a bearish pattern. However, a breakout from the upper rail of a rising wedge pattern is usually considered a bullish sign.
Buy Level(s): The ideal buy level for BNS is above the breakout level of the Rising Wedge Pattern. This translates to a price of around $65.00. This is marked in the chart below as a green color dotted line.
Daily chart – BNS
BNS – Rising Wedge Pattern
#10 UP Fintech Holding Limited (NASDAQ: TIGR)
Sector: Financial | Capital Markets
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 TIGR is if the stock breaks out of the falling wedge pattern as well as closes above the immediate resistance level of $23.70. This is marked in the chart below as a green color dotted line.
Daily chart – TIGR
TIGR – Falling Wedge Pattern
Happy Trading!
Trades of The Day Research Team
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