Half of this week’s list is the same pattern: the falling wedge.
Five of the 10 names — Karman, TransMedics, Sunrun, Sylvamo, and AppLovin — are breaking out of falling wedges. Add Six Flags pushing up out of a downtrend channel, and six of the 10 are breaking up out of a structure that was pointed down.
That tells you what kind of list this is. A falling wedge is what a beaten-down stock looks like right before it turns — price grinding lower into a tightening range until the selling dries up. These aren’t trend-continuation names riding momentum higher. They’re reversal candidates trying to put in a bottom.
The other four are a different character: Motorola riding a clean uptrend channel, JFrog pressing the top of a consolidation range, and KE Holdings and Roivant clearing symmetrical triangles.
What we want from the wedges is simple — the turn has to confirm. A falling-wedge breakout only means something if price can close above resistance and hold it. Otherwise it’s just the next lower high.
Here are the 10 stocks we’re watching this week, in no particular order.
| Sl # | Name of the Stock | Stock Ticker | Last Close | Buy Level(s) | Reason |
|---|---|---|---|---|---|
| 1 | Six Flags Entertainment Corporation | NYSE: FUN | $10.00 | $10.40 | Downtrend Channel Breakout |
| 2 | Motorola Solutions, Inc. | NYSE: MSI | $514.51 | $521.50 | Uptrend Channel |
| 3 | Karman Holdings Inc. | NYSE: KRMN | $45.61 | $46.10 | Falling Wedge Pattern Breakout |
| 4 | KE Holdings Inc. | NYSE: BEKE | $18.85 | $19.20 | Symmetrical Triangle Pattern Breakout |
| 5 | TransMedics Group, Inc. | Nasdaq: TMDX | $88.24 | $90.40 | Falling Wedge Pattern Breakout |
| 6 | JFrog Ltd. | Nasdaq: FROG | $100.98 | $104.00 | Consolidation Area |
| 7 | Sunrun Inc. | Nasdaq: RUN | $9.98 | $10.40 | Falling Wedge Pattern Breakout |
| 8 | Roivant Sciences Ltd. | Nasdaq: ROIV | $38.88 | $39.30 | Symmetrical Triangle Pattern Breakout |
| 9 | Sylvamo Corporation | NYSE: SLVM | $39.38 | $40.00 | Falling Wedge Pattern Breakout |
| 10 | AppLovin Corporation | Nasdaq: APP | $391.22 | $396.00 | Falling Wedge Pattern Breakout |
If needed, swipe or scroll sideways to view the full table.
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 Six Flags Entertainment Corporation (NYSE: FUN)
Sector: Consumer Discretionary • Leisure
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 FUN is if the stock has a daily close above $10.40. This is marked in the chart below as a green color dotted line.
Daily chart – FUN
FUN – Downtrend Channel Breakout
#2 Motorola Solutions, Inc. (NYSE: MSI)
Sector: Technology • Communication Equipment
Reason: Uptrend Channel
An uptrend or ascending channel is the price action contained between upward sloping parallel lines. It is formed by two lines drawn by connecting a series of higher highs and higher lows. The rising structure reflects sustained buying interest, while a decisive move above the upper rail can signal an acceleration of the prevailing bullish trend.
Buy Level(s): The stock is trading in a well-defined uptrend channel, but a near-term resistance level remains overhead. The ideal buy level for MSI is if the stock has a daily close above $521.50. This is marked in the chart below as a green color dotted line.
Daily chart – MSI
MSI – Uptrend Channel
#3 Karman Holdings Inc. (NYSE: KRMN)
Sector: Industrials • Aerospace & Defense
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 KRMN is above the nearest resistance level of $46.10. This is marked in the chart below as a green color dotted line.
Daily chart – KRMN
KRMN – Falling Wedge Pattern Breakout
#4 KE Holdings Inc. (NYSE: BEKE)
Sector: Real Estate • Real Estate 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 BEKE is if the stock closes above the immediate resistance level of $19.20. This is marked in the chart below as a green color dotted line.
Daily chart – BEKE
BEKE – Symmetrical Triangle Pattern Breakout
#5 TransMedics Group, Inc. (Nasdaq: TMDX)
Sector: Healthcare • Medical Devices
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 TMDX is above the nearest resistance level of $90.40. This is marked in the chart below as a green color dotted line.
Daily chart – TMDX
TMDX – Falling Wedge Pattern Breakout
#6 JFrog Ltd. (Nasdaq: FROG)
Sector: Technology • Software – Application
Reason: Consolidation Area
A consolidation area forms when a stock trades within a defined range as buyers and sellers reach a temporary balance. The price repeatedly tests the range boundaries without establishing a sustained trend. A decisive breakout above the upper boundary is typically a bullish indication and can mark the beginning of a new upward move.
Buy Level(s): The daily chart shows the stock trading near the upper boundary of a broad consolidation area. The ideal buy level for FROG is if the stock has a daily close above the range resistance level of $104.00. This is marked in the chart below as a green color dotted line.
Daily chart – FROG
FROG – Consolidation Area
#7 Sunrun Inc. (Nasdaq: RUN)
Sector: Technology • Solar
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 RUN is above the nearest resistance level of $10.40. This is marked in the chart below as a green color dotted line.
Daily chart – RUN
RUN – Falling Wedge Pattern Breakout
#8 Roivant Sciences Ltd. (Nasdaq: ROIV)
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 ROIV is if the stock closes above the immediate resistance level of $39.30. This is marked in the chart below as a green color dotted line.
Daily chart – ROIV
ROIV – Symmetrical Triangle Pattern Breakout
#9 Sylvamo Corporation (NYSE: SLVM)
Sector: Materials • Paper & Paper Products
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 SLVM is above the nearest resistance level of $40.00. This is marked in the chart below as a green color dotted line.
Daily chart – SLVM
SLVM – Falling Wedge Pattern Breakout
#10 AppLovin Corporation (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 $396.00. This is marked in the chart below as a green color dotted line.
Daily chart – APP
APP – Falling Wedge Pattern Breakout
Ten names, and half of them are the same story: falling wedges — Karman, TransMedics, Sunrun, Sylvamo, and AppLovin — where beaten-down price has coiled into a tightening range and is now trying to break higher. Six Flags, clearing a downtrend channel, reads the same way. The other four — Motorola’s uptrend channel, JFrog’s consolidation, and the symmetrical triangles in KE Holdings and Roivant — are cleaner continuation and range setups.
Reversal setups cut both ways, which is exactly why the discipline matters here. A clean daily close above the buy level listed alongside each ticker is the signal. Not the intraday tap. Not the open. The close. A wedge that pokes above resistance and fades right back is just the next lower high.
We’ll watch the table this week and let the names sort themselves out.
Happy Trading!
Tara and Greg