I'm not as eager to recommend investing long-term in stocks that trade less than $10 a share because these names can be very speculative, and the odds for picking the long-term winners aren't great. But I definitely love to trade stocks that are priced below $10. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right.

When I trade under-$10 names, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 names with a catalyst, but that's secondary to the chart and volume patterns.

With that in mind, here's a look at several under-$10 stocks that look poised to potentially trade higher from current levels.

EXFO

One under-$10 stock in the communications equipment complex that's trending very close to triggering a major breakout trade is EXFO ( EXFO). This company is a provider of next-generation test and service assurance solutions for wireless and wireline network operators and equipment manufacturers in the global telecommunications industry. This stock has been hammered by the sellers during the last six months, with shares off by around 30%.

If you take a look at the chart for EXFO, you'll notice that this stock has been downtrending for the last two months and change, with shares dropping from $5.93 to its recent low of $4.37 a share. During that downtrend, shares of EXFO were making mostly lower highs and lower lows, which is bearish technical price action. That said, the stock has started to spike higher during the last few trading sessions with monster upside volume. That action is now pushing EXFO within range of triggering a major breakout trade.

Traders should now look for long-biased trades in EXFO once it manages to break out above some near-term overhead resistance levels at $4.87 to $5.12 a share, and then once it takes out more resistance at $5.39 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 36,375 shares. If that breakout triggers soon, then EXFO will set up to re-test or possibly take out its next major overhead resistance levels at $5.93 to $6.83 a share.

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