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 | Five9, Inc. | NASDAQ: FIVN | $191.20 | $200.00 | Consolidation Area |
| 2 | Taboola.com, Ltd. | NASDAQ: TBLA | $10.30 | $11.10 | Falling Wedge Pattern |
| 3 | Twitter, Inc. | NYSE: TWTR | $71.69 | $78.50 | Symmetrical Triangle Pattern Breakout |
| 4 | Nurix Therapeutics, Inc. | NASDAQ: NRIX | $30.72 | $33.00 | Falling Wedge Pattern Breakout |
| 5 | Pinterest, Inc. | NYSE: PINS | $76.91 | $82.10 | Symmetrical Triangle Pattern |
| 6 | ICICI Bank Limited | NYSE: IBN | $18.29 | $18.50 | Ascending Triangle Pattern |
| 7 | The Trade Desk, Inc. | NASDAQ: TTD | $81.15 | $84.00 | Symmetrical Triangle Pattern Breakout |
| 8 | Endo International plc | NASDAQL ENDP | $5.00 | $6.20 | Falling Wedge Pattern Breakout |
| 9 | Warner Music Group Corp. | NASDAQ: WMG | $37.71 | $40.00 | Ascending Triangle Pattern |
| 10 | Zendesk, Inc. | NYSE: ZEN | $146.90 | $150.30 | Symmetrical 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 Five9, Inc. (NASDAQ: FIVN)
Sector: Technology | Software – Infrastructure
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 FIVN is if the stock has a daily close above the breakout level of the consolidation area, at around $200.00. This is marked in the chart below as a green color dotted line.
Daily chart – FIVN
FIVN – Consolidation Area
#2 Taboola.com, Ltd. (NASDAQ: TBLA)
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 TBLA is if the stock breaks out of the falling wedge pattern as well as closes above the immediate resistance level of $11.10. This is marked in the chart below as a green color dotted line.
Daily chart – TBLA
TBLA – Falling Wedge Pattern
#3 Twitter, Inc. (NYSE: TWTR)
Sector: Communication Services | Internet Content & Information
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): The daily chart shows that the stock has currently broken out of a symmetrical triangle pattern. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for TWTR is if the stock has a daily close above $78.50. This is marked in the chart below as a green color dotted line.
Daily chart – TWTR
TWTR – Symmetrical Triangle Pattern Breakout
#4 Nurix Therapeutics, Inc. (NASDAQ: NRIX)
Sector: Healthcare | Biotechnology
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 NRIX is above the nearest resistance level of $33.00. This is marked in the chart below as a green color dotted line.
Daily chart – NRIX
NRIX – Falling Wedge Pattern Breakout
#5 Pinterest, Inc. (NYSE: PINS)
Sector: Communication Services | Internet Content & Information
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 PINS is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $82.10. This is marked in the chart below as a green color dotted line.
Daily chart – PINS
PINS – Symmetrical Triangle Pattern
#6 ICICI Bank Limited (NYSE: IBN)
Sector: Financial | Banks – Regional
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 IBN is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $18.50. This is marked in the chart below as a green color dotted line.
Daily chart – IBN
IBN – Ascending Triangle Pattern
#7 The Trade Desk, Inc. (NASDAQ: TTD)
Sector: Technology | Software – Application
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): The daily chart shows that the stock has currently broken out of a symmetrical triangle pattern. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for TTD is if the stock has a daily close above $84.00. This is marked in the chart below as a green color dotted line.
Daily chart – TTD
TTD – Symmetrical Triangle Pattern Breakout
#8 Endo International plc (NASDAQ: ENDP)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 ENDP is above the nearest resistance level of $6.20. This is marked in the chart below as a green color dotted line.
Daily chart – ENDP
ENDP – Falling Wedge Pattern Breakout
#9 Warner Music Group Corp. (NASDAQ: WMG)
Sector: Communication Services | Entertainment
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 WMG is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $40.00. This is marked in the chart below as a green color dotted line.
Daily chart – WMG
WMG – Ascending Triangle Pattern
#10 Zendesk, Inc. (NYSE: ZEN)
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 ZEN is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $150.30. This is marked in the chart below as a green color dotted line.
Daily chart – ZEN
ZEN – Symmetrical Triangle Pattern
Happy Trading!
— Trades of The Day Research Team
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