The Top 10 Stocks to Watch This Week for Possible Breakouts

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

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 Samsara Inc. (NYSE: IOT)

Sector: Technology • Software – Infrastructure

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 IOT is if the stock has a daily close above $36.40. This is marked in the chart below as a green color dotted line.

Daily chart – IOT

IOT – Downtrend Channel Breakout

#2 Red Cat Holdings Inc. (NASDAQ: RCAT)

Sector: Industrials • Aerospace & Defense

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 RCAT is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $16.10. This is marked in the chart below as a green color dotted line.

Daily chart – RCAT

RCAT – Symmetrical Triangle Pattern

#3 CF Industries Holdings Inc. (NYSE: CF)

Sector: Basic Materials • Agricultural Inputs

Reason: Breakout From a Double Bottom Pattern

A Double Bottom Pattern looks like the letter W and is characterized by two well-defined lows at approximately the same price level. This twice-touched low is usually a very strong support level. The high point between the two bottoms’ resistance level is called a neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.

Buy Level(s): The stock has currently broken out of the double bottom pattern. However, the ideal buy level for CF is above the near-term resistance level of around $116.90. This is marked in the chart below as a green color dotted line.

Daily chart – CF

CF – Double Bottom Pattern Breakout

#4 Day One Biopharmaceuticals Inc. (NASDAQ: DAWN)

Sector: Healthcare • Biotechnology

Reason: Breakout From an Uptrend Channel

An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.

Buy Level(s): The stock has currently broken out of the uptrend channel. However, the ideal buy level for DAWN is if the stock has a daily close above the near-term resistance level of $21.30. This is marked in the chart below as a green color dotted line.

Daily chart – DAWN

DAWN – Uptrend Channel Breakout

#5 Intrepid Potash Inc. (NYSE: IPI)

Sector: Basic Materials • Agricultural Inputs

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 IPI is if the stock closes above the immediate resistance level of $42.80. This is marked in the chart below as a green color dotted line.

Daily chart – IPI

IPI – Symmetrical Triangle Pattern Breakout

#6 Flex Lng Ltd (NYSE: FLNG)

Sector: Energy • Oil & Gas Midstream

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 FLNG is above the near-term resistance area, which translates to a price of around $30.30. This is marked in the chart below as a green color dotted line.

Daily chart – FLNG

FLNG – Breakout From Consolidation Area

#7 Guidewire Software Inc. (NYSE: GWRE)

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 GWRE is if the stock has a daily close above $171.90. This is marked in the chart below as a green color dotted line.

Daily chart – GWRE

GWRE – Downtrend Channel Breakout

#8 Adecoagro S.A (NYSE: AGRO)

Sector: Consumer Defensive • Farm Products

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 AGRO is if the stock has a daily close above the near-term resistance level of $10.40. This is marked in the chart below as a green color dotted line.

Daily chart – AGRO

AGRO – Ascending Triangle Pattern Breakout

#9 Petroleo Brasileiro S.A. Petrobras ADR (NYSE: PBR)

Sector: Energy • Oil & Gas Integrated

Reason: Rising Wedge Pattern

A rising wedge pattern is formed by joining two upward-sloping, converging trendlines having a contracting range. The pattern appears to be wide at the bottom and continues to contract as prices rise. A breakout from a rising wedge pattern is often associated with high momentum and can signal an extended move. However, buying on this breakout is considered a more speculative trade due to the potential for a reversal.

Buy Level(s): The stock currently looks poised for break out of a rising wedge pattern. The ideal buy level for PBR is above the price of $17.90. This is marked in the chart below as a green color dotted line.

Daily chart – PBR

PBR – Rising Wedge Pattern

#10 Omada Health Inc. (NASDAQ: OMDA)

Sector: Healthcare • Health Information Services

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 OMDA is if the stock has a daily close above $14.50. This is marked in the chart below as a green color dotted line.

Daily chart – OMDA

OMDA – Downtrend Channel Breakout

Happy Trading!

Trades of The Day Research Team