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 | Aeva Technologies, Inc. | NYSE: AEVA | $11.51 | $12.50 | Downtrend Channel |
| 2 | Horizon Therapeutics Public Limited Company | NASDAQ: HZNP | $94.61 | $97.00 | Ascending Triangle Pattern |
| 3 | Lennar Corporation | NYSE: LEN | $98.17 | $100.00 | Uptrend Channel |
| 4 | Allakos Inc. | NASDAQ: ALLK | $91.86 | $100.50 | Falling Wedge Pattern |
| 5 | Far Peak Acquisition Corporation | NYSE: FPAC | $9.67 | $10.00 | Consolidation Area |
| 6 | Chevron Corporation | NYSE: CVX | $103.03 | $112.00 | Ascending Triangle Pattern |
| 7 | Healthcare Services Group, Inc. | NASDAQ: HCSG | $31.53 | $32.00 | Symmetrical Triangle Pattern |
| 8 | Iteris, Inc. | NASDAQ: ITI | $7.37 | $7.80 | Consolidation Area |
| 9 | Merus N.V. | NASDA: MRUS | $21.84 | $26.00 | Symmetrical Triangle Pattern |
| 10 | Bristow Group Inc. | NYSE: VTOL | $27.84 | $29.60 | Ascending Triangle 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 Aeva Technologies, Inc. (NYSE: AEVA)
Sector: Consumer Cyclical | Auto Parts
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 AEVA is if the stock has a daily close above the breakout level of the downtrend channel, at around $12.50. This is marked in the chart below as a green color dotted line.
Daily chart – AEVA
AEVA – Downtrend Channel
#2 Horizon Therapeutics Public Limited Company (NASDAQ: HZNP)
Sector: Healthcare | Drug Manufacturers – General
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 HZNP is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $97.00. This is marked in the chart below as a green color dotted line.
Daily chart – HZNP
HZNP – Ascending Triangle Pattern
#3 Lennar Corporation (NYSE: LEN)
Sector: Consumer Cyclical | Residential Construction
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 LEN is if the stock has a daily close above the near-term resistance level of $100.00 within the uptrend channel. This is marked in the chart below as a green color dotted line.
Daily chart – LEN
LEN – Downtrend Channel
#4 Allakos Inc. (NASDAQ: ALLK)
Sector: Healthcare | Biotechnology
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 ALLK is if the stock breaks out of the falling wedge pattern as well as closes above the immediate resistance level of $100.50. This is marked in the chart below as a green color dotted line.
Daily chart – ALLK
ALLK – Falling Wedge Pattern
#5 Far Peak Acquisition Corporation (NYSE: FPAC)
Sector: Financial | Shell Companies
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 FPAC is if the stock has a daily close above the breakout level of the consolidation area and closes above the price of around $10.00. This is marked in the chart below as a green color dotted line.
Daily chart – FPAC
FPAC – Consolidation Area
#6 Chevron Corporation (NYSE: CVX)
Sector: Energy | Oil & Gas Integrated
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 CVX is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $112.00. This is marked in the chart below as a green color dotted line.
Daily chart – CVX
CVX – Ascending Triangle Pattern
#7 Healthcare Services Group, Inc. (NASDAQ: HCSG)
Sector: Healthcare | Medical Care Facilities
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 HCSG is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $32.00. This is marked in the chart below as a green color dotted line.
Daily chart – HCSG
HCSG- Ssymmetrical Triangle Pattern
#8 Iteris, Inc. (NASDAQ: ITI)
Sector: Technology | Communication Equipment
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 ITI is if the stock has a daily close above the breakout level of the consolidation area and closes above the price of around $7.80. This is marked in the chart below as a green color dotted line.
Daily chart – ITI
ITI – Consolidation Area
#9 Merus N.V. (NASDAQ: MRUS)
Sector: Healthcare | Biotechnology
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 MRUS is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $26.00. This is marked in the chart below as a green color dotted line.
Daily chart – MRUS
MRUS- Ssymmetrical Triangle Pattern
#10 Bristow Group Inc. (NYSE: VTOL)
Sector: Energy | Oil & Gas Equipment & 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 VTOL is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $29.60. This is marked in the chart below as a green color dotted line.
Daily chart – VTOL
VTOL – Ascending Triangle Pattern
Happy Trading!
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