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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Foreign Stocks With Breakout Trade Potential

Stocks in this article: TI KB PHI BBD NVS

Novartis

Last up is Swiss pharma giant Novartis (NVS), a stock that's currently forming an ascending triangle bottom after selling off around 14% from its summer 2011 highs.

This setup in particular actually shares a few characteristics with the inverse head and shoulders in BBD. It should come as no surprise then that the buy signal comes at the equivalent spot in this pattern. Similarities aside, the ascending triangle is a pattern that's identified by horizontal resistance to the upside and uptrending support below shares. Essentially, as NVS bounces in between those two technically significant price levels, it's getting squeezed closer and closer to a breakout above resistance.

That's the buy signal for NVS.

Right now, momentum (as measured by the 14-day RSI) is stuck in an uptrend. Since momentum leads price, that's a good indication that the upside bias in NVS is still going strong. After the buy signal, I'd recommend keeping a protective stop just below the 200-day moving average on this trade as well.

Novartis shows up on a list of Large-Cap Dividend Stocks to Buy.

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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.
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