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 | Digital Turbine, Inc. | NASDAQ: APPS | $19.19 | $20.70 | Falling Wedge Pattern Breakout |
| 2 | Ebix, Inc. | NASDAQ: EBIX | $23.62 | $24.50 | Symmetrical Triangle Pattern Breakout |
| 3 | Magnite, Inc. | NASDAQ: MGNI | $11.60 | $12.40 | Falling Wedge Pattern Breakout |
| 4 | Aramark | NYSE: ARMK | $38.73 | $39.00 | Ascending Triangle Pattern |
| 5 | Doximity, Inc. | NYSE: DOCS | $34.94 | $35.40 | Falling Wedge Pattern Breakout |
| 6 | TG Therapeutics, Inc. | NASDAQ: TGTX | $9.34 | $9.70 | Symmetrical Triangle Pattern Breakout |
| 7 | Digital World Acquisition Corp. | NASDAQ: DWAC | $25.03 | $30.00 | Falling Wedge Pattern Breakout |
| 8 | Tempur Sealy International, Inc. | NYSE: TPX | $32.53 | $33.90 | Symmetrical Triangle Pattern Breakout |
| 9 | T. Rowe Price Group, Inc. | NASDAQ: TROW | $133.34 | $135.20 | Downtrend Channel Breakout |
| 10 | Unity Software Inc. | NYSE: U | $32.52 | $33.30 | 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 Digital Turbine, Inc. (NASDAQ: APPS)
Sector: Technology | Software – Application
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 APPS is above the nearest resistance level of $20.70. This is marked in the chart below as a green color dotted line.
Daily chart – APPS
APPS – Falling Wedge Pattern Breakout
#2 Ebix, Inc. (NASDAQ: EBIX)
Sector: Technology | Software – Application
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 EBIX is if the stock closes above the immediate resistance level of $24.50. This is marked in the chart below as a green color dotted line.
Daily chart – EBIX
EBIX – Symmetrical Triangle Pattern Breakout
#3 Magnite, Inc. (NASDAQ: MGNI)
Sector: Communication Services | Advertising Agencies
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 MGNI is above the nearest resistance level of $12.40. This is marked in the chart below as a green color dotted line.
Daily chart – MGNI
MGNI – Falling Wedge Pattern Breakout
#4 Aramark (NYSE: ARMK)
Sector: Consumer Cyclical | Restaurants
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 ARMK is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $39.00. This is marked in the chart below as a green color dotted line.
Daily chart – ARMK
ARMK – Ascending Triangle Pattern
#5 Doximity, Inc. (NYSE: DOCS)
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 DOCS is above the nearest resistance level of $35.40. This is marked in the chart below as a green color dotted line.
Daily chart – DOCS
DOCS – Falling Wedge Pattern Breakout
#6 TG Therapeutics, Inc. (NASDAQ: TGTX)
Sector: Healthcare | Biotechnology
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 TGTX is if the stock closes above the immediate resistance level of $9.70. This is marked in the chart below as a green color dotted line.
Daily chart – TGTX
TGTX – Symmetrical Triangle Pattern Breakout
#7 Digital World Acquisition Corp. (NASDAQ: DWAC)
Sector: Financial | Shell Companies
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 DWAC is above the nearest resistance level of $30.00. This is marked in the chart below as a green color dotted line.
Daily chart – DWAC
DWAC – Falling Wedge Pattern Breakout
#8 Tempur Sealy International, Inc. (NYSE: TPX)
Sector: Consumer Cyclical | Furnishings, Fixtures & Appliances
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 TPX is if the stock closes above the immediate resistance level of $33.90. This is marked in the chart below as a green color dotted line.
Daily chart – TPX
TPX – Symmetrical Triangle Pattern Breakout
#9 T. Rowe Price Group, Inc. (NASDAQ: TROW)
Sector: Financial | Asset Management
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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for TROW is above the near-term resistance area, which translates to a price of around $135.20. This is marked in the chart below as a green color dotted line.
Daily chart – TROW
TROW – Downtrend Channel Breakout
#10 Unity Software Inc. (NYSE: U)
Sector: Technology | Software – Application
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 U is above the nearest resistance level of $33.30. This is marked in the chart below as a green color dotted line.
Daily chart – U
U – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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