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 | SentinelOne Inc. | NYSE: S | $25.26 | $25.70 | Symmetrical Triangle Pattern Breakout |
| 2 | Roivant Sciences Ltd | NASDAQ: ROIV | $11.88 | $12.00 | Consolidation Area |
| 3 | Lowe’s Cos., Inc. | NYSE: LOW | $250.07 | $255.30 | Symmetrical Triangle Pattern Breakout |
| 4 | Carters Inc. | NYSE: CRI | $66.27 | $67.30 | Falling Wedge Pattern Breakout |
| 5 | Bilibili Inc ADR | NASDAQ: BILI | $14.94 | $15.50 | Symmetrical Triangle Pattern |
| 6 | Roku Inc. | NASDAQ: ROKU | $69.15 | $71.30 | Falling Wedge Pattern Breakout |
| 7 | Reddit Inc. | NYSE: RDDT | $59.21 | $59.70 | Symmetrical Triangle Pattern Breakout |
| 8 | Affirm Holdings Inc. | NASDAQ: AFRM | $31.46 | $34.00 | Downtrend Channel |
| 9 | EHang Holdings Ltd ADR | NASDAQ: EH | $15.30 | $16.20 | Symmetrical Triangle Pattern |
| 10 | Microstrategy Inc. | NASDAQ: MSTR | $150.01 | $155.60 | Symmetrical Triangle 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 SentinelOne Inc. (NYSE: S)
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 S is if the stock closes above the immediate resistance level of $25.70. This is marked in the chart below as a green color dotted line.
Daily chart – S
S – Symmetrical Triangle Pattern Breakout
#2 Roivant Sciences Ltd (NASDAQ: ROIV)
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 ROIV is above the breakout level of the consolidation area, at around $12.00. This is marked in the chart below as a green color dotted line.
Daily chart – ROIV
ROIV – Consolidation Area
#3 Lowe’s Cos., Inc. (NYSE: LOW)
Sector: Consumer Cyclical • Home Improvement Retail
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 LOW is if the stock closes above the immediate resistance level of $255.30. This is marked in the chart below as a green color dotted line.
Daily chart – LOW
LOW – Symmetrical Triangle Pattern Breakout
#4 Carters Inc. (NYSE: CRI)
Sector: Consumer Cyclical • Apparel Retail
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 CRI is above the nearest resistance level of $67.30. This is marked in the chart below as a green color dotted line.
Daily chart – CRI
CRI – Falling Wedge Pattern Breakout
#5 Bilibili Inc ADR (NASDAQ: BILI)
Sector: Communication Services • Electronic Gaming & Multimedia
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 BILI is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $15.50. This is marked in the chart below as a green color dotted line.
Daily chart – BILI
BILI – Symmetrical Triangle Pattern
#6 Roku Inc. (NASDAQ: ROKU)
Sector: Communication Services • Entertainment
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 ROKU is above the nearest resistance level of $71.30. This is marked in the chart below as a green color dotted line.
Daily chart – ROKU
ROKU – Falling Wedge Pattern Breakout
#7 Reddit Inc. (NYSE: RDDT)
Sector: Communication Services • Internet Content & Information
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 RDDT is if the stock closes above the immediate resistance level of $59.70. This is marked in the chart below as a green color dotted line.
Daily chart – RDDT
RDDT – Symmetrical Triangle Pattern Breakout
#8 Affirm Holdings Inc. (NASDAQ: AFRM)
Sector: Technology • Software – Infrastructure
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 AFRM is if the stock breaks out of the downtrend channel and has a daily close above $34.00. This is marked in the chart below as a green color dotted line.
Daily chart – AFRM
AFRM – Downtrend Channel
#9 EHang Holdings Ltd ADR (NASDAQ: EH)
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 EH is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $16.20. This is marked in the chart below as a green color dotted line.
Daily chart – EH
EH – Symmetrical Triangle Pattern
#10 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 $155.60. This is marked in the chart below as a green color dotted line.
Daily chart – MSTR
MSTR – Symmetrical Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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