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 | Global Medical REIT Inc. | NYSE: GMRE | $14.31 | $14.70 | Ascending Triangle Pattern |
| 2 | Aspen Technology, Inc. | NASDAQ: AZPN | $146.01 | $154.60 | Symmetrical Triangle Pattern |
| 3 | Renren Inc. | NYSE: RENN | $12.00 | $12.50 | Ascending Triangle Pattern Breakout |
| 4 | Wyndham Hotels & Resorts, Inc. | NYSE: WH | $75.50 | $75.90 | Flag Pattern Breakout |
| 5 | Nutanix, Inc. | NASDAQ: NTNX | $29.99 | $37.00 | Ascending Triangle Pattern, Downtrend Channel Breakout |
| 6 | Marathon Petroleum Corporation | NYSE: MPC | $60.08 | $61.20 | Uptrend Channel |
| 7 | Bentley Systems, Incorporated | NASDAQ: BSY | $49.96 | $53.00 | Ascending Triangle Pattern |
| 8 | DoorDash, Inc. | NYSE: DASH | $141.07 | $159.40 | Falling Wedge Pattern |
| 9 | RAPT Therapeutics, Inc. | NASDAQ: RAPT | $20.58 | $25.30 | Consolidation Area |
| 10 | Shift Technologies, Inc. | NASDAQ: SFT | $7.66 | $10.70 | Double Bottom 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 Global Medical REIT Inc. (NYSE: GMRE)
Sector: Real Estate | REIT – Healthcare Facilities
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 GMRE is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $14.70. This is marked in the chart below as a green color dotted line.
Daily chart – GMRE
GMRE – Ascending Triangle Pattern
#2 Aspen Technology, Inc. (NASDAQ: AZPN)
Sector: Technology | Software – Application
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 AZPN is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $154.60. This is marked in the chart below as a green color dotted line.
Daily chart – AZPN
AZPN – Symmetrical Triangle Pattern
#3 Renren Inc. (NYSE: RENN)
Sector: Consumer Cyclical | Auto & Truck Dealerships
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): Even though the stock has currently broken out of an ascending triangle pattern, the ideal buy level for RENN is above the near-term resistance level of $12.50. This is marked in the chart below as a green color dotted line.
Daily chart – RENN
RENN – Ascending Triangle Pattern
#4 Wyndham Hotels & Resorts, Inc. (NYSE: WH)
Sector: Consumer Cyclical | Lodging
Reason: Breakout From 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): Although the stock has currently broken out of the flag pattern, the ideal buy level for WH is above the near-term resistance level of $75.90. This is marked in the chart below as a green color dotted line.
Daily chart – WH
WH – Flag Pattern
#5 Nutanix, Inc. (NASDAQ: NTNX)
Sector: Technology | Software – Infrastructure
Reason: Downtrend Channel Pattern Breakout, Formation of An Ascending Triangle 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.
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 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 NTNX is if the stock has a daily close above $37.00. This is marked in the chart below as a green color dotted line.
Daily chart – NTNX
NTNX – Downtrend Channel Breakout, Ascending Triangle Pattern
#6 Marathon Petroleum Corporation (NYSE: MPC)
Sector: Energy | Oil & Gas Refining & Marketing
Reason: Formation of 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 ideal buy level for MPC is if the stock has a daily close above the breakout level of the uptrend channel, at around $61.20. This is marked in the chart below as a green color dotted line.
Daily chart – MPC
MPC – Uptrend Channel
#7 Bentley Systems, Incorporated (NASDAQ: BSY)
Sector: Technology | Software – Application
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 BSY is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $53.00. This is marked in the chart below as a green color dotted line.
Daily chart – BSY
BSY – Ascending Triangle Pattern
#8 DoorDash, Inc. (NYSE: DASH)
Sector: Communication Services | Internet Content & Information
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 DASH is if the stock breaks out of the falling wedge pattern as well as closes above the immediate resistance level of $159.40. This is marked in the chart below as a green color dotted line.
Daily chart – DASH
DASH – Falling Wedge Pattern
#9 RAPT Therapeutics, Inc. (NASDAQ: RAPT)
Sector: Healthcare | Biotechnology
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 RAPT is if the stock has a daily close above the breakout level of the consolidation area and closes above the price of around $25.30. This is marked in the chart below as a green color dotted line.
Daily chart – RAPT
RAPT – Consolidation Area
#10 Shift Technologies, Inc. (NASDAQ: SFT)
Sector: Consumer Cyclical | Internet Retail
Reason: Formation of a Double Bottom Pattern
A Double Bottom Pattern looks like the letter W and is characterized by two well-defined lows at approximately the same price level. This twice-touched low is usually a very strong support level. The high point between the two bottoms’ resistance level is called the neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
Buy Level(s): The ideal buy level for SFT is if the stock has a daily close above the breakout level of the double bottom pattern, at around $10.70. This is marked in the chart below as a green color dotted line.
Daily chart – SFT
SFT – Double Bottom Pattern
Happy Trading!
Trades of The Day Research Team
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