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 | DoubleVerify Holdings, Inc. | NYSE: DV | $29.25 | $29.40 | Symmetrical Triangle Pattern Breakout |
| 2 | BridgeBio Pharma, Inc. | NASDAQ: BBIO | $14.90 | $15.25 | Breakout From Consolidation Area |
| 3 | GameStop Corp. | NYSE: GME | $23.98 | $24.30 | Falling Wedge Pattern Breakout |
| 4 | Intuitive Surgical, Inc. | NASDAQ: ISRG | $256.42 | $261.50 | Symmetrical Triangle Pattern Breakout |
| 5 | Netflix, Inc. | NASDAQ: NFLX | $328.39 | $333.70 | Flag Pattern Breakout |
| 6 | Mondelez International, Inc. | NASDAQ: MDLZ | $69.04 | $69.10 | Symmetrical Triangle Pattern Breakout |
| 7 | Agilon Health, Inc. | NYSE: AGL | $28.69 | $29.00 | Breakout From Consolidation Area |
| 8 | Denbury Inc. | NYSE: DEN | $80.70 | $84.20 | Symmetrical Triangle Pattern |
| 9 | Steelcase Inc. | NYSE: SCS | $8.38 | $8.50 | Symmetrical Triangle Pattern Breakout |
| 10 | Signify Health, Inc. | NYSE: SGFY | $28.81 | $29.60 | Consolidation Area |
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 DoubleVerify Holdings, Inc. (NYSE: DV)
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 DV is if the stock closes above the immediate resistance level of $29.40. This is marked in the chart below as a green color dotted line.
Daily chart – DV
DV – Symmetrical Triangle Pattern Breakout
#2 BridgeBio Pharma, Inc. (NASDAQ: BBIO)
Sector: Healthcare | Biotechnology
Reason: Breakout From a Consolidation Area in the Daily Chart
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 BBIO is above the near-term resistance area, which translates to a price of around $15.25. This is marked in the chart below as a green color dotted line.
Daily chart – BBIO
BBIO – Breakout From Consolidation Area
#3 GameStop Corp. (NYSE: GME)
Sector: Consumer Cyclical | Specialty Retail
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 GME is above the nearest resistance level of $24.30. This is marked in the chart below as a green color dotted line.
Daily chart – GME
GME – Falling Wedge Pattern Breakout
#4 Intuitive Surgical, Inc. (NASDAQ: ISRG)
Sector: Healthcare | Medical Instruments & Supplies
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 ISRG is if the stock closes above the immediate resistance level of $261.50. This is marked in the chart below as a green color dotted line.
Daily chart – ISRG
ISRG – Symmetrical Triangle Pattern Breakout
#5 Netflix, Inc. (NASDAQ: NFLX)
Sector: Communication Services | Entertainment
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 NFLX is above the near-term resistance level of $333.70. This is marked in the chart below as a green color dotted line.
Daily chart – NFLX
NFLX – Flag Pattern Breakout
#6 Mondelez International, Inc. (NASDAQ: MDLZ)
Sector: Consumer Defensive | Confectioners
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 MDLZ is if the stock closes above the immediate resistance level of $69.10. This is marked in the chart below as a green color dotted line.
Daily chart – MDLZ
MDLZ – Symmetrical Triangle Pattern Breakout
#7 Agilon Health, Inc. (NYSE: AGL)
Sector: Healthcare | Medical Care Facilities
Reason: Breakout From a Consolidation Area in the Daily Chart
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 AGL is above the near-term resistance area, which translates to a price of around $29.00. This is marked in the chart below as a green color dotted line.
Daily chart – AGL
AGL – Breakout From Consolidation Area
#8 Denbury Inc. (NYSE: DEN)
Sector: Energy | Oil & Gas E&P
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 DEN is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $84.20. This is marked in the chart below as a green color dotted line.
Daily chart – DEN
DEN – Symmetrical Triangle Pattern
#9 Steelcase Inc. (NYSE: SCS)
Sector: Industrials | Business Equipment & Supplies
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 SCS is if the stock closes above the immediate resistance level of $8.50. This is marked in the chart below as a green color dotted line.
Daily chart – SCS
SCS – Symmetrical Triangle Pattern Breakout
#10 Signify Health, Inc. (NYSE: SGFY)
Sector: Healthcare | Health Information Services
Reason: Formation of a Consolidation Area in the Daily Chart
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 SGFY is above the breakout level of the consolidation area, at around $29.60. This is marked in the chart below as a green color dotted line.
Daily chart – SGFY
SGFY – Consolidation Area
Happy Trading!
Trades of The Day Research Team