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TheStreet Open House

5 Stocks to Trade for Breakout Gains

Stocks in this article: LNKDPAYESRXCVXIP

Chevron

Next up this week is integrated gas supermajor Chevron (CVX), a stock that's forming a bullish technical setup right now. To be sure, Chevron is forming a similar trading opportunity as many of its industry peers. That's thanks to the sustained high price of oil we've seen for the last several months.

But ignore the fundamental factors for now, and this setup is a clear-cut ascending triangle opportunity.

An ascending triangle is a setup that's identified by horizontal resistance to the upside and uptrending support below. Essentially, as share prices bounce in between those two technically relevant price levels, they get squeezed closer and closer to a breakout above resistance. When that happens, we have our buy signal for shares. For Chevron, that resistance level to watch is actually a range between $108 and $110.

Because Chevron's upside barrier is a range, entering this stock gets slightly trickier. Risk and reward go hand-in-hand: Higher-risk traders can take a position when shares crack $108, whereas more conservative traders should wait for $110 to get broken before buying.

Either way, tight stops are crucial. Keeping a stop at the 50-day moving average is a good way to mitigate risk on this trade.

Chevron shows up on recent lists of Top 1 Dividend Stocks to Own Until Retirement and 21 Stock Picks That Experts Agree On.

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