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 | MACOM Technology Solutions Holdings, Inc. | NASDAQ: MTSI | $64.17 | $65.00 | Symmetrical Triangle Pattern |
| 2 | Aterian, Inc. | NASDAQ: ATER | $11.80 | $12.50 | Falling Wedge Pattern Breakout |
| 3 | Aerie Pharmaceuticals, Inc. | NASDAQ: AERI | $16.63 | $18.20 | Downtrend Channel |
| 4 | National Beverage Corp. | NASDAQ: FIZZ | $52.55 | $56.00 | Consolidation Area |
| 5 | Roblox Corporation | NYSE: RBLX | $87.88 | $90.50 | Symmetrical Triangle Pattern |
| 6 | The Lovesac Company | NASDAQ: LOVE | $67.44 | $70.00 | Falling Wedge Pattern Breakout |
| 7 | WillScot Mobile Mini Holdings Corp. | NASDAQ: WSC | $28.47 | $30.20 | Consolidation Area |
| 8 | Bumble Inc. | NASDAQ: BMBL | $58.20 | $60.20 | Symmetrical Triangle Pattern |
| 9 | Match Group, Inc. | NASDAQ: MTCH | $164.38 | $172.00 | Flag Pattern |
| 10 | Peloton Interactive, Inc. | NASDAQ: PTON | $114.39 | $129.00 | 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 MACOM Technology Solutions Holdings, Inc. (NASDAQ: MTSI)
Sector: Technology | Semiconductors
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 MTSI is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $65.00. This is marked in the chart below as a green color dotted line.
Daily chart – MTSI
MTSI – Symmetrical Triangle Pattern
#2 Aterian, Inc. (NASDAQ: ATER)
Sector: Technology | Consumer Electronics
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 ATER is above the nearest resistance level of $12.50. This is marked in the chart below as a green color dotted line.
Daily chart – ATER
ATER – Falling Wedge Pattern Breakout
#3 Aerie Pharmaceuticals, Inc. ( NASDAQ: AERI)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 AERI is if the stock has a daily close above the breakout level of the downtrend channel, at around $18.20. This is marked in the chart below as a green color dotted line.
Daily chart – AERI
AERI – Downtrend Channel
#4 National Beverage Corp. (NASDAQ: FIZZ)
Sector: Consumer Defensive | Beverages – Non-Alcoholic
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 FIZZ is if the stock has a daily close above the breakout level of the consolidation area and closes above the price of around $56.00. This is marked in the chart below as a green color dotted line.
Daily chart – FIZZ
FIZZ – Consolidation Area
#5 Roblox Corporation (NYSE: RBLX)
Sector: Communication Services | Electronic Gaming & Multimedia
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 RBLX is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $90.50. This is marked in the chart below as a green color dotted line.
Daily chart – RBLX
RBLX – Symmetrical Triangle Pattern
#6 The Lovesac Company (NASDAQ: LOVE)
Sector: Consumer Cyclical | Furnishings, Fixtures & Appliances
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 LOVE is above the nearest resistance level of $70.00. This is marked in the chart below as a green color dotted line.
Daily chart – LOVE
LOVE – Falling Wedge Pattern Breakout
#7 WillScot Mobile Mini Holdings Corp. (NASDAQ: WSC)
Sector: Industrials | Rental & Leasing Services
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 WSC is if the stock has a daily close above the breakout level of the consolidation area and closes above the price of around $30.20. This is marked in the chart below as a green color dotted line.
Daily chart – WSC
WSC – Consolidation Area
#8 Bumble Inc. (NASDAQ: BMBL)
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 BMBL is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $60.20. This is marked in the chart below as a green color dotted line.
Daily chart – BMBL
BMBL – Symmetrical Triangle Pattern
#9 Match Group, Inc. (NASDAQ: MTCH)
Sector: Communication Services | Internet Content & Information
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 MTCH is if the stock breaks out of the flag pattern, at around $172.00. This is marked in the chart below as a green color dotted line.
Daily chart – MTCH
MTCH – Flag Pattern
#10 Peloton Interactive, Inc. (NASDAQ: PTON)
Sector: Consumer Cyclical | Leisure
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 PTON is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $129.00. This is marked in the chart below as a green color dotted line.
Daily chart – PTON
PTON – Symmetrical Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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