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 | Vale S.A. | NYSE: VALE | $13.32 | $14.00 | Falling Wedge Pattern |
| 2 | Agnico Eagle Mines Limited | NYSE: AEM | $42.23 | $46.40 | Downtrend Channel |
| 3 | Avenue Therapeutics, Inc. | NASDAQ: ATXI | $10.08 | $10.20 | Falling Wedge Pattern Breakout |
| 4 | Barrick Gold Corporation | NYSE: GOLD | $15.50 | $16.00 | Downtrend Channel Breakout |
| 5 | AngloGold Ashanti Limited | NYSE: AU | $13.82 | $14.50 | Falling Wedge Pattern Breakout |
| 6 | Twitter, Inc. | NYSE: TWTR | $43.84 | $44.40 | Symmetrical Triangle Pattern Breakout |
| 7 | Fastly, Inc. | NYSE: FSLY | $9.16 | $10.60 | Falling Wedge Pattern |
| 8 | Navient Corporation | NASDAQ: NAVI | $14.69 | $15.40 | Downtrend Channel |
| 9 | Gold Fields Limited | NYSE: GFI | $8.09 | $8.60 | Falling Wedge Pattern Breakout |
| 10 | SSR Mining Inc. | NASDAQ: SSRM | $14.71 | $14.80 | 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 Vale S.A. (NYSE: VALE)
Sector: Basic Materials | Other Industrial Metals & Mining
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 VALE is if the stock breaks out of the falling wedge pattern, at a price of around $14.00. This is marked in the chart below as a green color dotted line.
Daily chart – VALE
VALE – Falling Wedge Pattern
#2 Agnico Eagle Mines Limited (NYSE: AEM)
Sector: Basic Materials | Gold
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 AEM is if the stock breaks out of the downtrend channel and has a daily close above $46.40. This is marked in the chart below as a green color dotted line.
Daily chart – AEM
AEM – Downtrend Channel
#3 Avenue Therapeutics, Inc. (NASDAQ: ATXI)
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 ATXI is above the nearest resistance level of $10.20. This is marked in the chart below as a green color dotted line.
Daily chart – ATXI
ATXI – Falling Wedge Pattern Breakout
#4 Barrick Gold Corporation (NYSE: GOLD)
Sector: Basic Materials | Gold
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 GOLD is if the stock has a daily close above $16.00. This is marked in the chart below as a green color dotted line.
Daily chart – GOLD
GOLD – Downtrend Channel Breakout
#5 AngloGold Ashanti Limited (NYSE: AU)
Sector: Basic Materials | Gold
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 AU is above the nearest resistance level of $14.50. This is marked in the chart below as a green color dotted line.
Daily chart – AU
AU – Falling Wedge Pattern Breakout
#6 Twitter, Inc. (NYSE: TWTR)
Sector: Communication Services | Internet Content & Information
Reason: Symmetrical Triangle Pattern Breakout
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 stock has currently broken out of a symmetrical triangle pattern. However, the ideal buy level for TWTR is if the stock closes above the immediate resistance level of $44.40. This is marked in the chart below as a green color dotted line.
Daily chart – TWTR
TWTR – Symmetrical Triangle Pattern Breakout
#7 Fastly, Inc. (NYSE: FSLY)
Sector: Technology | Software – Application
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 FSLY is if the stock breaks out of the falling wedge pattern, at a price of around $10.60. This is marked in the chart below as a green color dotted line.
Daily chart – FSLY
FSLY – Falling Wedge Pattern
#8 Navient Corporation (NASDAQ: NAVI)
Sector: Financial | Credit Services
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 NAVI is if the stock breaks out of the downtrend channel and has a daily close above $15.40. This is marked in the chart below as a green color dotted line.
Daily chart – NAVI
NAVI – Downtrend Channel
#9 Gold Fields Limited (NYSE: GFI)
Sector: Basic Materials | Gold
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 GFI is above the nearest resistance level of $8.60. This is marked in the chart below as a green color dotted line.
Daily chart – GFI
GFI – Falling Wedge Pattern Breakout
#10 SSR Mining Inc. (NASDAQ: SSRM)
Sector: Basic Materials | Gold
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 SSRM is if the stock has a daily close above $14.80. This is marked in the chart below as a green color dotted line.
Daily chart – SSRM
SSRM – Downtrend Channel Breakout
Happy Trading!
Trades of The Day Research Team