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 | Helen of Troy Limited | NASDAQ: HELE | $97.60 | $103.40 | Downtrend Channel Breakout |
| 2 | Icosavax, Inc. | NASDAQ: ICVX | $9.98 | $10.30 | Falling Wedge Pattern Breakout |
| 3 | Dragonfly Energy Holdings Corp. | NASDAQ: DFLI | $16.31 | $16.40 | Symmetrical Triangle Pattern Breakout |
| 4 | Meta Platforms, Inc. | NASDAQ: META | $119.43 | $124.90 | Downtrend Channel Breakout |
| 5 | TAL Education Group | NYSE: TAL | $7.46 | $7.50 | Ascending Triangle Pattern Breakout |
| 6 | SilverCrest Metals Inc. | AMEX: SILV | $6.32 | $7.00 | Downtrend Channel Breakout |
| 7 | Natera, Inc. | NASDAQ: NTRA | $43.32 | $44.00 | Symmetrical Triangle Pattern Breakout |
| 8 | Atlassian Corporation | NASDAQ: TEAM | $147.26 | $151.10 | Downtrend Channel |
| 9 | Maxar Technologies Inc. | NYSE: MAXR | $51.93 | $52.10 | Symmetrical Triangle Pattern Breakout |
| 10 | Under Armour, Inc. | NYSE: UAA | $10.15 | $10.65 | 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 Helen of Troy Limited (NASDAQ: HELE)
Sector: Consumer Defensive | Household & Personal Products
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 HELE is if the stock has a daily close above $103.40. This is marked in the chart below as a green color dotted line.
Daily chart – HELE
HELE – Downtrend Channel Breakout
#2 Icosavax, Inc. (NASDAQ: ICVX)
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 ICVX is above the nearest resistance level of $10.30. This is marked in the chart below as a green color dotted line.
Daily chart – ICVX
ICVX – Falling Wedge Pattern Breakout
#3 Dragonfly Energy Holdings Corp. (NASDAQ: DFLI)
Sector: Industrials | Electrical Equipment & Parts
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 DFLI is if the stock closes above the immediate resistance level of $16.40. This is marked in the chart below as a green color dotted line.
Daily chart – DFLI
DFLI – Symmetrical Triangle Pattern Breakout
#4 Meta Platforms, Inc. (NASDAQ: META)
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 META is if the stock has a daily close above $124.90. This is marked in the chart below as a green color dotted line.
Daily chart – META
META – Downtrend Channel Breakout
#5 TAL Education Group (NYSE: TAL)
Sector: Consumer Defensive | Education & Training Services
Reason: Breakout From 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): Although the stock has broken out of the ascending triangle pattern, the ideal buy level for TAL is if the stock has a daily close above the near-term resistance level of $7.50. This is marked in the chart below as a green color dotted line.
Daily chart – TAL
TAL – Ascending Triangle Pattern Breakout
#6 SilverCrest Metals Inc. (AMEX: SILV)
Sector: Basic Materials | Other Industrial Metals & Mining
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 SILV is if the stock has a daily close above $7.00. This is marked in the chart below as a green color dotted line.
Daily chart – SILV
SILV – Downtrend Channel Breakout
#7 Natera, Inc. (NASDAQ: NTRA)
Sector: Healthcare | Diagnostics & Research
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 NTRA is if the stock closes above the immediate resistance level of $44.00. This is marked in the chart below as a green color dotted line.
Daily chart – NTRA
NTRA – Symmetrical Triangle Pattern Breakout
#8 Atlassian Corporation (NASDAQ: TEAM)
Sector: Technology | Software – Application
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 TEAM is if the stock breaks out of the downtrend channel and has a daily close above $151.10. This is marked in the chart below as a green color dotted line.
Daily chart – TEAM
TEAM – Downtrend Channel
#9 Maxar Technologies Inc. (NYSE: MAXR)
Sector: Technology | Communication Equipment
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 MAXR is if the stock closes above the immediate resistance level of $52.10. This is marked in the chart below as a green color dotted line.
Daily chart – MAXR
MAXR – Symmetrical Triangle Pattern Breakout
#10 Under Armour, Inc. (NYSE: UAA)
Sector: Consumer Cyclical | Apparel Manufacturing
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 UAA is if the stock has a daily close above $10.65. This is marked in the chart below as a green color dotted line.
Daily chart – UAA
UAA – Downtrend Channel Breakout
Happy Trading!
Trades of The Day Research Team
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