By Trades Of The Day Research Team, Trades Of The Day, 2024-07-08
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 | Palantir Technologies Inc. | NYSE: PLTR | $27.23 | $27.50 | Symmetrical Triangle Pattern Breakout |
| 2 | WestRock Co | NYSE: WRK | $51.51 | $53.00 | Flag Pattern Breakout |
| 3 | AngloGold Ashanti Plc. | NYSE: AU | $28.83 | $29.00 | Ascending Triangle Pattern Breakout |
| 4 | Berkshire Hathaway Inc. | NYSE: BRK.B | $411.17 | $415.00 | Symmetrical Triangle Pattern |
| 5 | XP Inc. | NASDAQ: XP | $17.07 | $18.00 | Falling Wedge Pattern |
| 6 | Futu Holdings Ltd ADR | NASDAQ: FUTU | $70.90 | $73.90 | Symmetrical Triangle Pattern |
| 7 | Chipotle Mexican Grill | NYSE: CMG | $62.75 | $64.30 | Flag Pattern |
| 8 | Evolent Health Inc. | NYSE: EVH | $20.00 | $21.00 | Downtrend Channel |
| 9 | Baxter International Inc. | NYSE: BAX | $34.91 | $35.50 | Falling Wedge Pattern Breakout |
| 10 | NCR Voyix Corp | NYSE: VYX | $13.26 | $14.00 | Symmetrical Triangle 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 Palantir Technologies Inc. (NYSE: PLTR)
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 PLTR is if the stock closes above the immediate resistance level of $27.50. This is marked in the chart below as a green color dotted line.
Daily chart – PLTR
PLTR – Symmetrical Triangle Pattern Breakout
#2 WestRock Co (NYSE: WRK)
Sector: Consumer Cyclical • Packaging & Containers
Reason: Breakout From 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): Although the stock has currently broken out of the flag pattern, the ideal buy level for WRK is above the near-term resistance level of $53.00. This is marked in the chart below as a green color dotted line.
Daily chart – WRK
WRK – Flag Pattern Breakout
#3 AngloGold Ashanti Plc. (NYSE: AU)
Sector: Basic Materials • Gold
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 AU is if the stock has a daily close above the near-term resistance level of $29.00. This is marked in the chart below as a green color dotted line.
Daily chart – AU
AU – Ascending Triangle Pattern Breakout
#4 Berkshire Hathaway Inc. (NYSE: BRK.B)
Sector: Financial • Insurance – Diversified
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 BRK.B is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $415.00. This is marked in the chart below as a green color dotted line.
Daily chart – BRK.B
BRK.B – Symmetrical Triangle Pattern
#5 XP Inc. (NASDAQ: XP)
Sector: Financial • Capital Markets
Reason: Formation of a Falling Wedge Pattern
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 ideal buy level for XP is if the stock breaks out of the falling wedge pattern, at a price of around $18.00. This is marked in the chart below as a green color dotted line.
Daily chart – XP
XP – Falling Wedge Pattern
Get the remaining five stocks at Trades Of the Day where this post was first published.
