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 | CBAK Energy Technology, Inc. | NASDAQ: CBAT | $8.28 | $9.70 | Symmetrical Triangle Pattern |
| 2 | ObsEva SA | NASDAQ: OBSV | $5.05 | $5.40 | Downtrend Channel |
| 3 | Tremont Mortgage Trust | NASDAQ: TRMT | $4.81 | $5.50 | Uptrend Channel |
| 4 | Richardson Electronics, Ltd. | NASDAQ: RELL | $6.77 | $8.00 | Downtrend Channel Breakout |
| 5 | Brookline Bancorp, Inc. | NASDAQ: BRKL | $13.78 | $13.90 | Uptrend Channel |
| 6 | Flex LNG Ltd. | NYSE: FLNG | $8.97 | $9.70 | Flag Pattern |
| 7 | Spire Inc. | NYSE: SR | $67.67 | $68.70 | Ascending Triangle Pattern |
| 8 | TELA Bio, Inc. | NASDAQ: TELA | $15.75 | $17.00 | Symmetrical Triangle Pattern |
| 9 | Yumanity Therapeutics, Inc. | NASDAQ: YMTX | $20.50 | $26.00 | Downtrend Channel |
| 10 | Autoliv, Inc. | NYSE: ALV | $93.51 | $95.80 | Flag 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 CBAK Energy Technology, Inc. (NASDAQ: CBAT)
Sector: Industrials | Electrical Equipment & Parts
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 an 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 CBAT is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $9.70. This is marked in the chart below as a green color dotted line.
Daily chart – CBAT
CBAT – Symmetrical Triangle Pattern
#2 ObsEva SA (NASDAQ: OBSV)
Sector: Healthcare | Biotechnology
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 ideal buy level for OBSV is above the breakout level of the Downtrend Channel. This translates to a price of around $5.40. This is marked in the chart below as a green color dotted line.
Daily chart – OBSV
OBSV – Downtrend Channel
#3 Tremont Mortgage Trust (NASADQ: TRMT)
Sector: Real Estate | REIT – Mortgage
Reason: Formation of 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 ideal buy level for TRMT is if the stock breaks out of the uptrend channel and closes above the immediate resistance level of $5.50. This is marked in the chart below as a green color dotted line.
Daily chart – TRMT
TRMT – Uptrend Channel
#4 Richardson Electronics, Ltd. (NASDAQ: RELL)
Sector: Technology | Electronic Components
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 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 RELL is if the stock has a daily close above $8.00. This is marked in the chart below as a green color dotted line.
Daily chart – RELL
RELL – Downtrend Channel Breakout
#5 Brookline Bancorp, Inc. (NASDAQ: BRKL)
Sector: Financial | Banks – Regional
Reason: Formation of 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 ideal buy level for BRKL is if the stock breaks out of the uptrend channel, at around $13.90. This is marked in the chart below as a green color dotted line.
Daily chart – BRKL
BRKL – Uptrend Channel
#6 Flex LNG Ltd. (NYSE: FLNG)
Sector: Energy | Oil & Gas Midstream
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 FLNG is if the stock breaks out of the flag pattern, at around $9.70. This is marked in the chart below as a green color dotted line.
Daily chart – FLNG
FLNG – Flag Pattern
#7 Spire Inc. (NYSE: SR)
Sector: Utilities | Utilities – Regulated Gas
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 SR is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $68.70. This is marked in the chart below as a green color dotted line.
Daily chart – SR
SR – Ascending Triangle Pattern
#8 TELA Bio, Inc. (NASDAQ: TELA)
Sector: Healthcare | Medical Devices
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 an 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 TELA is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $17.00. This is marked in the chart below as a green color dotted line.
Daily chart – TELA
TELA – Symmetrical Triangle Pattern
#9 Yumanity Therapeutics, Inc. (NASDAQ: YMTX)
Sector: Healthcare | Biotechnology
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 ideal buy level for YMTX is if the stock breaks out of the downtrend channel and has a daily close above the 200-day SMA at around $26.00. This is marked in the chart below as a green color dotted line.
Daily chart – YMTX
YMTX – Downtrend Channel
#10 Autoliv, Inc. (NYSE: ALV)
Sector: Consumer Cyclical | Auto Parts
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 ALV is if the stock has a daily close above the breakout level of the flag pattern, at around $95.80. This is marked in the chart below as a green color dotted line. for
Daily chart – ALV
ALV – Flag Pattern
Happy Trading!
Trades of The Day Research Team
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