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 | Diamond Offshore Drilling, Inc. | NYSE: DO | $14.24 | $14.50 | Symmetrical Triangle Pattern Breakout |
| 2 | CymaBay Therapeutics, Inc. | NASDAQ: CBAY | $10.95 | $11.10 | Flag Pattern Breakout |
| 3 | JPMorgan Chase & Co. | NYSE: JPM | $145.44 | $146.80 | Ascending Triangle Pattern Breakout |
| 4 | Noble Corporation Plc | NYSE: NE | $41.31 | $41.70 | Symmetrical Triangle Pattern Breakout |
| 5 | Carnival Corporation & plc | NYSE: CCL | $18.83 | $19.20 | Breakout From Consolidation Area |
| 6 | Rivian Automotive, Inc. | NASDAQ: RIVN | $16.66 | $17.20 | Symmetrical Triangle Pattern Breakout |
| 7 | Block, Inc. | NYSE: SQ | $66.57 | $67.60 | Downtrend Channel Breakout |
| 8 | Visa Inc. | NYSE: V | $237.48 | $240.20 | Breakout From Consolidation Area |
| 9 | Transocean Ltd. | NYSE: RIG | $7.01 | $7.20 | Symmetrical Triangle Pattern Breakout |
| 10 | Vornado Realty Trust | NYSE: VNO | $18.14 | $19.20 | 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 Diamond Offshore Drilling, Inc. (NYSE: DO)
Sector: Energy | Oil & Gas Drilling
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 DO is if the stock closes above the immediate resistance level of $14.50. This is marked in the chart below as a green color dotted line.
Daily chart – DO
DO – Symmetrical Triangle Pattern Breakout
#2 CymaBay Therapeutics, Inc. (NASDAQ: CBAY)
Sector: Healthcare | Biotechnology
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 CBAY is above the near-term resistance level of $11.10. This is marked in the chart below as a green color dotted line.
Daily chart – CBAY
CBAY – Flag Pattern Breakout
#3 JPMorgan Chase & Co. (NYSE: JPM)
Sector: Financial | Banks – Diversified
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 JPM is if the stock has a daily close above the near-term resistance level of $146.80. This is marked in the chart below as a green color dotted line.
Daily chart – JPM
JPM – Ascending Triangle Pattern Breakout
#4 Noble Corporation Plc (NYSE: NE)
Sector: Energy | Oil & Gas Drilling
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 NE is if the stock closes above the immediate resistance level of $41.70. This is marked in the chart below as a green color dotted line.
Daily chart – NE
NE – Symmetrical Triangle Pattern Breakout
#5 Carnival Corporation & plc (NYSE: CCL)
Sector: Consumer Cyclical | Travel Services
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 CCL is above the near-term resistance area, which translates to a price of around $19.20. This is marked in the chart below as a green color dotted line.
Daily chart – CCL
CCL – Breakout From Consolidation Area
#6 Rivian Automotive, Inc. (NASDAQ: RIVN)
Sector: Consumer Cyclical | Auto Manufacturers
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 RIVN is if the stock closes above the immediate resistance level of $17.20. This is marked in the chart below as a green color dotted line.
Daily chart – RIVN
RIVN – Symmetrical Triangle Pattern Breakout
#7 Block, Inc. (NYSE: SQ)
Sector: Technology | Software – Infrastructure
Reason: Downtrend Channel Breakout
A downtrend or descending channel is the price action contained between downward sloping 0parallel 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 SQ is above the near-term resistance area, which translates to a price of around $67.60. This is marked in the chart below as a green color dotted line.
Daily chart – SQ
SQ – Downtrend Channel Breakout
#8 Visa Inc. (NYSE: V)
Sector: Financial | Credit Services
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 V is above the near-term resistance area, which translates to a price of around $240.20. This is marked in the chart below as a green color dotted line.
Daily chart – V
V – Breakout From Consolidation Area
#9 Transocean Ltd. (NYSE: RIG)
Sector: Energy | Oil & Gas Drilling | Switzerland
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 RIG is if the stock closes above the immediate resistance level of $7.20. This is marked in the chart below as a green color dotted line.
Daily chart – RIG
RIG – Symmetrical Triangle Pattern Breakout
#10 Vornado Realty Trust (NYSE: VNO)
Sector: Real Estate | REIT – Office
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 VNO is above the nearest resistance level of $19.20. This is marked in the chart below as a green color dotted line.
Daily chart – VNO
VNO – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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