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 | DocuSign Inc. | NASDAQ: DOCU | $49.73 | $50.50 | Downtrend Channel Breakout |
| 2 | SLM Corp. | NASDAQ: SLM | $16.86 | $17.00 | Symmetrical Triangle Pattern Breakout |
| 3 | Hertz Global Holdings Inc. | NASDAQ: HTZ | $9.38 | $9.50 | Falling Wedge Pattern Breakout |
| 4 | Outfront Media Inc. | NYSE: OUT | $12.71 | $13.00 | Symmetrical Triangle Pattern |
| 5 | Corsair Gaming Inc. | NASDAQ: CRSR | $13.73 | $14.00 | Downtrend Channel Breakout |
| 6 | Genworth Financial Inc. | NYSE: GNW | $6.25 | $6.30 | Ascending Triangle Pattern |
| 7 | Qorvo Inc. | NASDAQ: QRVO | $103.97 | $104.80 | Symmetrical Triangle Pattern Breakout |
| 8 | MBIA Inc. | NYSE: MBI | $13.42 | $13.80 | Falling Wedge Pattern Breakout |
| 9 | Livent Corp | NYSE: LTHM | $15.52 | $16.00 | Downtrend Channel Breakout |
| 10 | RingCentral Inc. | NYSE: RNG | $34.11 | $35.60 | Symmetrical Triangle 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 DocuSign Inc. (NASDAQ: DOCU)
Sector: Technology • Software – Application
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 DOCU is if the stock has a daily close above $50.50. This is marked in the chart below as a green color dotted line.
Daily chart – DOCU
DOCU – Downtrend Channel Breakout
#2 SLM Corp. (NASDAQ: SLM)
Sector: Financial • Credit Services
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 SLM is if the stock closes above the immediate resistance level of $17.00. This is marked in the chart below as a green color dotted line.
Daily chart – SLM
SLM – Symmetrical Triangle Pattern Breakout
#3 Hertz Global Holdings Inc. (NASDAQ: HTZ)
Sector: Industrials • Rental & Leasing 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 HTZ is above the nearest resistance level of $9.50. This is marked in the chart below as a green color dotted line.
Daily chart – HTZ
HTZ – Falling Wedge Pattern Breakout
#4 Outfront Media Inc. (NYSE: OUT)
Sector: Real Estate • REIT – Specialty
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 OUT is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $13.00. This is marked in the chart below as a green color dotted line.
Daily chart – OUT
OUT – Symmetrical Triangle Pattern
#5 Corsair Gaming Inc. (NASDAQ: CRSR)
Sector: Technology • Computer Hardware
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 CRSR is if the stock has a daily close above $14.00. This is marked in the chart below as a green color dotted line.
Daily chart – CRSR
CRSR – Downtrend Channel Breakout
#6 Genworth Financial Inc. (NYSE: GNW)
Sector: Financial • Insurance – Life
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 GNW is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $6.30. This is marked in the chart below as a green color dotted line.
Daily chart – GNW
GNW – Ascending Triangle Pattern
#7 Qorvo Inc. (NASDAQ: QRVO)
Sector: Technology • Semiconductors
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 QRVO is if the stock closes above the immediate resistance level of $104.80. This is marked in the chart below as a green color dotted line.
Daily chart – QRVO
QRVO – Symmetrical Triangle Pattern Breakout
#8 MBIA Inc. (NYSE: MBI)
Sector: Financial • Insurance – Specialty
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 MBI is above the nearest resistance level of $13.80. This is marked in the chart below as a green color dotted line.
Daily chart – MBI
MBI – Falling Wedge Pattern Breakout
#9 Livent Corp (NYSE: LTHM)
Sector: Basic Materials • Specialty Chemicals
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 LTHM 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 – LTHM
LTHM – Downtrend Channel Breakout
#10 RingCentral Inc. (NYSE: RNG)
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 RNG is if the stock closes above the immediate resistance level of $35.60. This is marked in the chart below as a green color dotted line.
Daily chart – RNG
RNG – Symmetrical Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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