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 | Groupon Inc. | NASDAQ: GRPN | $14.85 | $15.00 | Breakout From Consolidation Area |
| 2 | Microstrategy Inc. | NASDAQ: MSTR | $297.49 | $317.30 | Symmetrical Triangle Pattern |
| 3 | ServiceTitan Inc. | NASDAQ: TTAN | $93.00 | $93.20 | Falling Wedge Pattern Breakout |
| 4 | D-Wave Quantum Inc. | NYSE: QBTS | $10.15 | $10.30 | Symmetrical Triangle Pattern Breakout |
| 5 | Quantum Corp | NASDAQ: QMCO | $15.34 | $16.60 | Symmetrical Triangle Pattern Breakout |
| 6 | Radius Recycling Inc. | NASDAQ: RDUS | $27.81 | $28.10 | Downtrend Channel Breakout |
| 7 | Freeport-McMoRan Inc. | NYSE: FCX | $38.85 | $40.40 | Falling Wedge Pattern Breakout |
| 8 | Crown Castle Inc. | NYSE: CCI | $103.22 | $104.00 | Symmetrical Triangle Pattern Breakout |
| 9 | DocuSign Inc. | NASDAQ: DOCU | $85.76 | $88.50 | Downtrend Channel |
| 10 | Applovin Corp | NASDAQ: APP | $292.89 | $301.50 | 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 Groupon Inc. (NASDAQ: GRPN)
Sector: Communication Services • Internet Content & Information
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 GRPN is above the near-term resistance area, which translates to a price of around $15.00. This is marked in the chart below as a green color dotted line.
Daily chart – GRPN
GRPN – Breakout From Consolidation Area
#2 Microstrategy Inc. (NASDAQ: MSTR)
Sector: Technology • Software – Application
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 MSTR is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $317.30. This is marked in the chart below as a green color dotted line.
Daily chart – MSTR
MSTR – Symmetrical Triangle Pattern
#3 ServiceTitan Inc. (NASDAQ: TTAN)
Sector: Technology • Software – Application
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 TTAN is above the nearest resistance level of $93.20. This is marked in the chart below as a green color dotted line.
Daily chart – TTAN
TTAN – Falling Wedge Pattern Breakout
#4 D-Wave Quantum Inc. (NYSE: QBTS)
Sector: Technology • Computer Hardware
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 QBTS is if the stock closes above the immediate resistance level of $10.30. This is marked in the chart below as a green color dotted line.
Daily chart – QBTS
QBTS – Symmetrical Triangle Pattern Breakout
#5 Quantum Corp (NASDAQ: QMCO)
Sector: Technology • Computer Hardware
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 QMCO is if the stock closes above the immediate resistance level of $16.60. This is marked in the chart below as a green color dotted line.
Daily chart – QMCO
QMCO – Symmetrical Triangle Pattern Breakout
#6 Radius Recycling Inc. (NASDAQ: RDUS)
Sector: Basic Materials • Steel
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 RDUS is if the stock has a daily close above $28.10. This is marked in the chart below as a green color dotted line.
Daily chart – RDUS
RDUS – Downtrend Channel Breakout
#7 Freeport-McMoRan Inc. (NYSE: FCX)
Sector: Basic Materials • Copper
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 FCX is above the nearest resistance level of $40.40. This is marked in the chart below as a green color dotted line.
Daily chart – FCX
FCX – Falling Wedge Pattern Breakout
#8 Crown Castle Inc. (NYSE: CCI)
Sector: Real Estate • REIT – Specialty
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 CCI is if the stock closes above the immediate resistance level of $104.00. This is marked in the chart below as a green color dotted line.
Daily chart – CCI
CCI – Symmetrical Triangle Pattern Breakout
#9 DocuSign Inc. (NASDAQ: DOCU)
Sector: Technology • Software – Application
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 DOCU is if the stock breaks out of the downtrend channel and has a daily close above $88.50. This is marked in the chart below as a green color dotted line.
Daily chart – DOCU
DOCU – Downtrend Channel
#10 Applovin Corp (NASDAQ: APP)
Sector: Technology • Software – Application
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 APP is above the nearest resistance level of $301.50. This is marked in the chart below as a green color dotted line.
Daily chart – APP
APP – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
