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 | McDonald’s Corp | NYSE: MCD | $296.01 | $301.70 | Flag Pattern |
| 2 | Urban Outfitters, Inc. | NASDAQ: URBN | $48.73 | $49.00 | Falling Wedge Pattern Breakout |
| 3 | Arcutis Biotherapeutics Inc. | NASDAQ: ARQT | $13.04 | $13.80 | Symmetrical Triangle Pattern Breakout |
| 4 | Hesai Group ADR | NASDAQ: HSAI | $8.18 | $8.45 | Breakout From Consolidation Area |
| 5 | Plains GP Holdings LP | NASDAQ: PAGP | $20.02 | $20.10 | Symmetrical Triangle Pattern Breakout |
| 6 | Bitdeer Technologies Holding Co. | NASDAQ: BTDR | $14.27 | $14.40 | Ascending Triangle Pattern Breakout |
| 7 | Unilever plc ADR | NYSE: UL | $59.84 | $60.70 | Flag Pattern Breakout |
| 8 | Energy Fuels Inc. | AMEX: UUUU | $7.26 | $7.40 | Downtrend Channel Breakout |
| 9 | Recursion Pharmaceuticals Inc. | NASDAQ: RXRX | $7.07 | $7.90 | Falling Wedge Pattern |
| 10 | Apple Inc. | NASDAQ: AAPL | $237.33 | $237.60 | Ascending Triangle Pattern |
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 McDonald’s Corp (NYSE: MCD)
Sector: Consumer Cyclical • Restaurants
Reason: Formation of 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): The ideal buy level for MCD is if the stock breaks out of the flag pattern, at around $301.70. This is marked in the chart below as a green color dotted line.
Daily chart – MCD
MCD – Flag Pattern
#2 Urban Outfitters, Inc. (NASDAQ: URBN)
Sector: Consumer Cyclical • Apparel 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 URBN is above the nearest resistance level of $49.00. This is marked in the chart below as a green color dotted line.
Daily chart – URBN
URBN – Falling Wedge Pattern Breakout
#3 Arcutis Biotherapeutics Inc. (NASDAQ: ARQT)
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 ARQT is if the stock closes above the immediate resistance level of $13.80. This is marked in the chart below as a green color dotted line.
Daily chart – ARQT
ARQT – Symmetrical Triangle Pattern Breakout
#4 Hesai Group ADR (NASDAQ: HSAI)
Sector: Consumer Cyclical • Auto Parts
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 HSAI is above the near-term resistance area, which translates to a price of around $8.45. This is marked in the chart below as a green color dotted line.
Daily chart – HSAI
HSAI – Breakout From Consolidation Area
#5 Plains GP Holdings LP (NASDAQ: PAGP)
Sector: Energy • Oil & Gas Midstream
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 PAGP is if the stock closes above the immediate resistance level of $20.10. This is marked in the chart below as a green color dotted line.
Daily chart – PAGP
PAGP – Symmetrical Triangle Pattern Breakout
#6 Bitdeer Technologies Holding Co. (NASDAQ: BTDR)
Sector: Technology • Software – Application
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 BTDR is if the stock has a daily close above the near-term resistance level of $14.40. This is marked in the chart below as a green color dotted line.
Daily chart – BTDR
BTDR – Ascending Triangle Pattern Breakout
#7 Unilever plc ADR (NYSE: UL)
Sector: Consumer Defensive • Household & Personal Products
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 UL is above the near-term resistance level of $60.70. This is marked in the chart below as a green color dotted line.
Daily chart – UL
UL – Flag Pattern Breakout
#8 Energy Fuels Inc. (AMEX: UUUU)
Sector: Energy • Uranium
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 UUUU is if the stock has a daily close above $7.40. This is marked in the chart below as a green color dotted line.
Daily chart – UUUU
UUUU – Downtrend Channel Breakout
#9 Recursion Pharmaceuticals Inc. (NASDAQ: RXRX)
Sector: Healthcare • Biotechnology
Reason: Formation of a Falling Wedge Pattern
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 ideal buy level for RXRX is if the stock breaks out of the falling wedge pattern, at a price of around $7.90. This is marked in the chart below as a green color dotted line.
Daily chart – RXRX
RXRX – Falling Wedge Pattern
#10 Apple Inc. (NASDAQ: AAPL)
Sector: Technology • Consumer Electronics
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 AAPL is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $237.60. This is marked in the chart below as a green color dotted line.
Daily chart – AAPL
AAPL – Ascending Triangle Pattern
Happy Trading!
Trades of The Day Research Team
Fed's Stealthy Move Could Crash U.S. Market [sponsor]A new, secretive move being carried out by the Fed that has nothing to do with lowering or raising interest rates... could soon have an enormous impact on your wealth. According to Dan Ferris, the banking expert who once predicted the collapse of Lehman Brothers, "Millions are about to be blindsided." More here.