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 | Advanced Micro Devices, Inc. | NASDAQ: AMD | $106.30 | $108.70 | Falling Wedge Pattern Breakout |
| 2 | Starbucks Corporation | NASDAQ: SBUX | $79.05 | $79.70 | Downtrend Channel Breakout |
| 3 | Chewy, Inc. | NYSE: CHWY | $28.80 | $32.80 | Falling Wedge Pattern |
| 4 | ChargePoint Holdings, Inc. | NYSE: CHPT | $14.57 | $16.80 | Downtrend Channel |
| 5 | C3.ai, Inc. | NYSE: AI | $19.84 | $19.90 | Falling Wedge Pattern Breakout |
| 6 | Okta, Inc. | NASDAQ: OKTA | $98.38 | $118.50 | Downtrend Channel |
| 7 | Enerplus Corporation | NYSE: ERF | $16.04 | $16.20 | Flag Pattern Breakout |
| 8 | Weibo Corporation | NASDAQ: WB | $22.45 | $23.60 | Downtrend Channel Breakout |
| 9 | Repare Therapeutics Inc. | NASDAQ: RPTX | $13.13 | $14.00 | Falling Wedge Pattern Breakout |
| 10 | ACADIA Pharmaceuticals Inc. | NASDAQ: ACAD | $17.90 | $18.50 | Downtrend Channel Breakout |
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 Advanced Micro Devices, Inc. (NASDAQ: AMD)
Sector: Technology | Semiconductors
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 AMD is above the nearest resistance level of $108.70. This is marked in the chart below as a green color dotted line.
Daily chart – AMD
AMD – Falling Wedge Pattern Breakout
#2 Starbucks Corporation (NASDAQ: SBUX)
Sector: Consumer Cyclical | Restaurants
Reason: Downtrend Channel Breakout
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 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 SBUX is if the stock has a daily close above $79.70. This is marked in the chart below as a green color dotted line.
Daily chart – SBUX
SBUX – Downtrend Channel Breakout
#3 Chewy, Inc. (NYSE: CHWY)
Sector: Consumer Cyclical | Internet Retail
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 CHWY is if the stock breaks out of the falling wedge pattern, at a price of around $32.80. This is marked in the chart below as a green color dotted line.
Daily chart – CHWY
CHWY – Falling Wedge Pattern
#4 ChargePoint Holdings, Inc. (NYSE: CHPT)
Sector: Consumer Cyclical | Specialty Retail
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 daily chart shows that the stock is currently forming a downtrend channel. The ideal buy level for CHPT is if the stock breaks out of the downtrend channel and has a daily close above $16.80. This is marked in the chart below as a green color dotted line.
Daily chart – CHPT
CHPT – Downtrend Channel
#5 C3.ai, Inc. (NYSE: AI)
Sector: Technology | Information Technology Services
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 AI is above the nearest resistance level of $19.90. This is marked in the chart below as a green color dotted line.
Daily chart – AI
AI – Falling Wedge Pattern Breakout
#6 Okta, Inc. (NASDAQ: OKTA)
Sector: Technology | Software – Infrastructure
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 daily chart shows that the stock is currently forming a downtrend channel. The ideal buy level for OKTA is if the stock breaks out of the downtrend channel and has a daily close above $118.50. This is marked in the chart below as a green color dotted line.
Daily chart – OKTA
OKTA – Downtrend Channel
#7 Enerplus Corporation (NYSE: ERF)
Sector: Energy | Oil & Gas E&P
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 ERF is above the near-term resistance level of $16.20. This is marked in the chart below as a green color dotted line.
Daily chart – ERF
ERF – Flag Pattern Breakout
#8 Weibo Corporation (NASDAQ: WB)
Sector: Communication Services | Internet Content & Information
Reason: Downtrend Channel Breakout
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 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 WB is if the stock has a daily close above $23.60. This is marked in the chart below as a green color dotted line.
Daily chart – WB
WB – Downtrend Channel Breakout
#9 Repare Therapeutics Inc. (NASDAQ: RPTX)
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 RPTX is above the nearest resistance level of $14.00. This is marked in the chart below as a green color dotted line.
Daily chart – RPTX
RPTX – Falling Wedge Pattern Breakout
#10 ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD)
Sector: Healthcare | Biotechnology
Reason: Downtrend Channel Breakout
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 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 ACAD is if the stock has a daily close above $18.50. This is marked in the chart below as a green color dotted line.
Daily chart – ACAD
ACAD – Downtrend Channel Breakout
Happy Trading!
Trades of The Day Research Team
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