The Top 10 Stocks to Watch This Week for Possible Breakouts

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 Open Lending Corporation NASDAQ: LPRO $39.15 $43.00 Ascending Triangle Pattern
2 DocuSign, Inc. NASDAQ: DOCU $233.24 $267.00 Consolidation Area
3 American Superconductor Corporation NASDAQ: AMSC $17.54 $19.60 Downtrend Channel
4 Envestnet, Inc. NYSE: ENV $79.40 $87.00 Double Bottom Pattern Breakout, Ascending Triangle Pattern
5 Loop Industries, Inc. NASDAQ: LOOP $11.63 $12.00 Symmetrical Triangle Pattern
6 Paysafe Limited NYSE: PSFE $12.26 $13.00 Downtrend Channel
7 Humanigen, Inc. NASDAQ: HGEN $18.58 $24.10 Ascending Triangle Pattern
8 Clean Energy Fuels Corp. NASDAQ: CLNE $9.31 $10.80 Falling Wedge Pattern
9 Chimerix, Inc. NASDAQ: CMRX $8.69 $10.00 Flag Pattern Breakout
10 MongoDB, Inc. NASDAQ: MDB $315.27 $324.00 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 Open Lending Corporation (NASDAQ: LPRO)

Sector: Financial | Credit Services

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 LPRO is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $43.00. This is marked in the chart below as a green color dotted line.

Daily chart – LPRO

LPRO – Ascending Triangle Pattern

#2 DocuSign, Inc. (NASDAQ: DOCU)

Sector: Technology | Software – Application

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 DOCU is if the stock has a daily close above the breakout level of the consolidation area and closes above the price of around $267.00. This is marked in the chart below as a green color dotted line.

Daily chart – DOCU

DOCU – Consolidation Area

#3 American Superconductor Corporation (NASDAQ: AMSC)

Sector: Industrials | Specialty Industrial Machinery

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 AMSC is if the stock has a daily close above the breakout level of the downtrend channel, at around $19.60. This is marked in the chart below as a green color dotted line.

Daily chart – AMSC

AMSC – Downtrend Channel

#4 Envestnet, Inc. (NYSE: ENV)

Sector: Technology | Software – Application

Reason: Double Bottom Pattern Breakout, Formation of an Ascending Triangle 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 levels is called the neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.

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 ENV is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $87.00. This is marked in the chart below as a green color dotted line.

Daily chart – ENV

ENV- Ascending Triangle Pattern, Double Bottom Pattern Breakout

#5 Loop Industries, Inc. (NASDAQ: LOOP)

Sector: Basic Materials | Specialty Chemicals

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 LOOP is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $12.00. This is marked in the chart below as a green color dotted line.

Daily chart – LOOP

LOOP – Symmetrical Triangle Pattern

#6 Paysafe Limited (NYSE: PSFE)

Sector: Technology | Information Technology Services

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 PSFE is if the stock has a daily close above the breakout level of the downtrend channel, at around $13.00. This is marked in the chart below as a green color dotted line.

Daily chart – PSFE

PSFE – Downtrend Channel

#7 Humanigen, Inc. (NASDAQ: HGEN)

Sector: Healthcare | Biotechnology

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 HGEN is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $24.10. This is marked in the chart below as a green color dotted line.

Daily chart – HGEN

HGEN – Ascending Triangle Pattern

#8 Clean Energy Fuels Corp. (NASDAQ: CLNE)

Sector: Energy | Oil & Gas Refining & Marketing

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 CLNE is if the stock breaks out of the falling wedge pattern as well as closes above the immediate resistance level of $10.80. This is marked in the chart below as a green color dotted line.

Daily chart – CLNE

CLNE – Falling Wedge Pattern

#9 Chimerix, Inc. (NASDAQ: CMRX)

Sector: Healthcare | Biotechnology

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 CMRX is above the near-term resistance level of $10.00. This is marked in the chart below as a green color dotted line.

Daily chart – CMRX

CMRX – Flag Pattern Breakout

#10 MongoDB, Inc. (NASDAQ: MDB)

Sector: Technology | Software – Infrastructure

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 a 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 MDB is above the neckline of the double bottom pattern, at around $324.00. This is marked in the chart below as a green color dotted line.

Daily chart – MDB

MDB – Double Bottom Pattern

Happy Trading!

Trades of The Day Research Team

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