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 | The Wendy’s Company | NASDAQ: WEN | $20.53 | $21.10 | Symmetrical Triangle Pattern |
| 2 | Bausch Health Companies Inc. | NYSE: BHC | $7.40 | $8.20 | Falling Wedge Pattern Breakout |
| 3 | Elanco Animal Health Incorporated | NYSE: ELAN | $15.00 | $15.50 | Downtrend Channel |
| 4 | Asana, Inc. | NYSE: ASAN | $24.66 | $26.80 | Falling Wedge Pattern Breakout |
| 5 | IVERIC bio, Inc. | NASDAQ: ISEE | $18.59 | $19.00 | Consolidation Area |
| 6 | Criteo S.A. | NASDAQ: CRTO | $29.35 | $30.00 | Falling Wedge Pattern Breakout |
| 7 | Regeneron Pharmaceuticals, Inc. | NASDAQ: REGN | $724.32 | $727.40 | Symmetrical Triangle Pattern Breakout |
| 8 | Riot Blockchain, Inc. | NASDAQ: RIOT | $8.26 | $8.80 | Falling Wedge Pattern Breakout |
| 9 | Zscaler, Inc. | NASDAQ: ZS | $188.00 | $189.30 | Symmetrical Triangle Pattern Breakout |
| 10 | Pagaya Technologies Ltd. | NASDAQ: PGY | $11.00 | $11.70 | 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 The Wendy’s Company (NASDAQ: WEN)
Sector: Consumer Cyclical | Restaurants
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 WEN is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $21.10. This is marked in the chart below as a green color dotted line.
Daily chart – WEN
WEN – Symmetrical Triangle Pattern
#2 Bausch Health Companies Inc. (NYSE: BHC)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 BHC is above the nearest resistance level of $8.20. This is marked in the chart below as a green color dotted line.
Daily chart – BHC
BHC – Falling Wedge Pattern Breakout
#3 Elanco Animal Health Incorporated (NYSE: ELAN)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 ELAN is if the stock breaks out of the downtrend channel and has a daily close above $15.50. This is marked in the chart below as a green color dotted line.
Daily chart – ELAN
ELAN – Downtrend Channel
#4 Asana, Inc. (NYSE: ASAN)
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 ASAN is above the nearest resistance level of $26.80. This is marked in the chart below as a green color dotted line.
Daily chart – ASAN
ASAN – Falling Wedge Pattern Breakout
#5 IVERIC bio, Inc. (NASDAQ: ISEE)
Sector: Healthcare | Biotechnology
Reason: Formation of 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): The ideal buy level for ISEE is above the breakout level of the consolidation area, at around $19.00. This is marked in the chart below as a green color dotted line.
Daily chart – ISEE
ISEE – Consolidation Area
#6 Criteo S.A. (NASDAQ: CRTO)
Sector: Communication Services | Advertising Agencies
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 CRTO is above the nearest resistance level of $30.00. This is marked in the chart below as a green color dotted line.
Daily chart – CRTO
CRTO – Falling Wedge Pattern Breakout
#7 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN)
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 REGN is if the stock closes above the immediate resistance level of $727.40. This is marked in the chart below as a green color dotted line.
Daily chart – REGN
REGN – Symmetrical Triangle Pattern Breakout
#8 Riot Blockchain, Inc. (NASDAQ: RIOT)
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 RIOT is above the nearest resistance level of $8.80. This is marked in the chart below as a green color dotted line.
Daily chart – RIOT
RIOT – Falling Wedge Pattern Breakout
#9 Zscaler, Inc. (NASDAQ: ZS)
Sector: Technology | Software – Infrastructure
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 ZS is if the stock closes above the immediate resistance level of $189.30. This is marked in the chart below as a green color dotted line.
Daily chart – ZS
ZS – Symmetrical Triangle Pattern Breakout
#10 Pagaya Technologies Ltd. (NASDAQ: PGY)
Sector: Technology | Software – Infrastructure
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 PGY is above the nearest resistance level of $11.70. This is marked in the chart below as a green color dotted line.
Daily chart – PGY
PGY – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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