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 | Broadcom Inc. | NASDAQ: AVGO | $224.80 | $228.20 | Ascending Triangle Pattern Breakout |
| 2 | MaxLinear Inc. | NASDAQ: MXL | $20.68 | $21.10 | Symmetrical Triangle Pattern Breakout |
| 3 | WISeKey International Holding Ltd ADR | NASDAQ: WKEY | $7.84 | $8.30 | Breakout From Consolidation Area |
| 4 | Albertsons Companies Inc. | NYSE: ACI | $19.50 | $19.90 | Symmetrical Triangle Pattern |
| 5 | Skyworks Solutions, Inc. | NASDAQ: SWKS | $90.98 | $92.70 | Falling Wedge Pattern Breakout |
| 6 | Redwood Trust Inc. | NYSE: RWT | $7.13 | $7.30 | Symmetrical Triangle Pattern |
| 7 | Vornado Realty Trust | NYSE: VNO | $44.66 | $46.50 | Downtrend Channel |
| 8 | Lamb Weston Holdings Inc. | NYSE: LW | $79.27 | $81.50 | Symmetrical Triangle Pattern |
| 9 | Allegro Microsystems Inc. | NASDAQ: ALGM | $22.00 | $23.00 | Falling Wedge Pattern |
| 10 | UP Fintech Holding Ltd ADR | NASDAQ: TIGR | $7.65 | $7.90 | Symmetrical 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 Broadcom Inc. (NASDAQ: AVGO)
Sector: Technology • Semiconductors
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 AVGO is if the stock has a daily close above the near-term resistance level of $228.20. This is marked in the chart below as a green color dotted line.
Daily chart – AVGO
AVGO – Ascending Triangle Pattern Breakout
#2 MaxLinear Inc. (NASDAQ: MXL)
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 MXL is if the stock closes above the immediate resistance level of $21.10. This is marked in the chart below as a green color dotted line.
Daily chart – MXL
MXL – Symmetrical Triangle Pattern Breakout
#3 WISeKey International Holding Ltd ADR (NASDAQ: WKEY)
Sector: Technology • Semiconductors
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 WKEY is above the near-term resistance area, which translates to a price of around $8.30. This is marked in the chart below as a green color dotted line.
Daily chart – WKEY
WKEY – Breakout From Consolidation Area
#4 Albertsons Companies Inc. (NYSE: ACI)
Sector: Consumer Defensive • Grocery Stores
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 ACI is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $19.90. This is marked in the chart below as a green color dotted line.
Daily chart – ACI
ACI – Symmetrical Triangle Pattern
#5 Skyworks Solutions, Inc. (NASDAQ: SWKS)
Sector: Technology • Semiconductors
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 SWKS is above the nearest resistance level of $92.70. This is marked in the chart below as a green color dotted line.
Daily chart – SWKS
SWKS – Falling Wedge Pattern Breakout
#6 Redwood Trust Inc. (NYSE: RWT)
Sector: Real Estate • REIT – Mortgage
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 RWT is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $7.30. This is marked in the chart below as a green color dotted line.
Daily chart – RWT
RWT – Symmetrical Triangle Pattern
#7 Vornado Realty Trust (NYSE: VNO)
Sector: Real Estate • REIT – Office
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 VNO is if the stock breaks out of the downtrend channel and has a daily close above $46.50. This is marked in the chart below as a green color dotted line.
Daily chart – VNO
VNO – Downtrend Channel
#8 Lamb Weston Holdings Inc. (NYSE: LW)
Sector: Consumer Defensive • Packaged Foods
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 LW is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $81.50. This is marked in the chart below as a green color dotted line.
Daily chart – LW
LW – Symmetrical Triangle Pattern
#9 Allegro Microsystems Inc. (NASDAQ: ALGM)
Sector: Technology • Semiconductors
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 ALGM is if the stock breaks out of the falling wedge pattern, at a price of around $23.00. This is marked in the chart below as a green color dotted line.
Daily chart – ALGM
ALGM – Falling Wedge Pattern
#10 UP Fintech Holding Ltd ADR (NASDAQ: TIGR)
Sector: Financial • Capital Markets
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 TIGR is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $7.90. This is marked in the chart below as a green color dotted line.
Daily chart – TIGR
TIGR – Symmetrical Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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