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 | Amplitude, Inc. | NASDAQ: AMPL | $18.28 | $19.70 | Consolidation Area |
| 2 | Aemetis, Inc. | NASDAQ: AMTX | $10.18 | $10.70 | Falling Wedge Pattern Breakout |
| 3 | Carvana Co. | NYSE: CVNA | $46.98 | $47.50 | Downtrend Channel Breakout |
| 4 | Cloudflare, Inc. | NYSE: NET | $74.54 | $80.30 | Falling Wedge Pattern Breakout |
| 5 | Global Blood Therapeutics, Inc. | NASDAQ: GBT | $63.84 | $66.50 | Breakout From Consolidation Area |
| 6 | Progyny, Inc. | NASDAQ: PGNY | $41.15 | $41.40 | Falling Wedge Pattern Breakout |
| 7 | Coty Inc. | NYSE: COTY | $7.52 | $8.00 | Symmetrical Triangle Pattern |
| 8 | Penumbra, Inc. | NYSE: PEN | $166.83 | $167.30 | Falling Wedge Pattern Breakout |
| 9 | Shake Shack Inc. | NYSE: SHAK | $51.56 | $54.50 | Downtrend Channel |
| 10 | Tripadvisor, Inc. | NASDAQ: TRIP | $23.86 | $24.10 | Falling Wedge Pattern 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 Amplitude, Inc. (NASDAQ: AMPL)
Sector: Technology | Software – Application
Reason: Formation of a Consolidation Area
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 AMPL is above the breakout level of the consolidation area, at around $19.70. This is marked in the chart below as a green color dotted line.
Daily chart – AMPL
AMPL – Consolidation Area
#2 Aemetis, Inc. (NASDAQ: AMTX)
Sector: Energy | Oil & Gas Refining & Marketing
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 AMTX is above the nearest resistance level of $10.70. This is marked in the chart below as a green color dotted line.
Daily chart – AMTX
AMTX – Falling Wedge Pattern Breakout
#3 Carvana Co. (NYSE: CVNA)
Sector: Consumer Cyclical | Internet Retail
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 CVNA is if the stock has a daily close above $47.50. This is marked in the chart below as a green color dotted line.
Daily chart – CVNA
CVNA – Downtrend Channel Breakout
#4 Cloudflare, Inc. (NYSE: NET)
Sector: Technology | Software – Infrastructure
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 NET is above the nearest resistance level of $80.30. This is marked in the chart below as a green color dotted line.
Daily chart – NET
NET – Falling Wedge Pattern Breakout
#5 Global Blood Therapeutics, Inc. (NASDAQ: GBT)
Sector: Healthcare | Biotechnology
Reason: Breakout From a Consolidation Area
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): Although the stock has currently broken out of a consolidation area, the ideal buy level for GBT is above the near-term resistance area, which translates to a price of around $66.50. This is marked in the chart below as a green color dotted line.
Daily chart – GBT
GBT – Breakout From Consolidation Area
#6 Progyny, Inc. (NASDAQ: PGNY)
Sector: Healthcare | Health Information 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 PGNY is above the nearest resistance level of $41.40. This is marked in the chart below as a green color dotted line.
Daily chart – PGNY
PGNY – Falling Wedge Pattern Breakout
#7 Coty Inc. (NYSE: COTY)
Sector: Consumer Defensive | Household & Personal Products
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 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 COTY is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $8.00. This is marked in the chart below as a green color dotted line.
Daily chart – COTY
COTY – Symmetrical Triangle Pattern
#8 Penumbra, Inc. (NYSE: PEN)
Sector: Healthcare | Medical Devices
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 PEN is above the nearest resistance level of $167.30. This is marked in the chart below as a green color dotted line.
Daily chart – PEN
PEN – Falling Wedge Pattern Breakout
#9 Shake Shack Inc. (NYSE: SHAK)
Sector: Consumer Cyclical | Restaurants
Reason: Downtrend Channel Pattern
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 SHAK is if the stock breaks out of the downtrend channel and closes above the price of $54.50. This is marked in the chart below as a green color dotted line.
Daily chart – SHAK
SHAK – Downtrend Channel
#10 Tripadvisor, Inc. (NASDAQ: TRIP)
Sector: Consumer Cyclical | Travel 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 TRIP is above the nearest resistance level of $24.10. This is marked in the chart below as a green color dotted line.
Daily chart – TRIP
TRIP – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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