One under-$10 stock that's trending very close to trigger a major breakout trade is Oncothyreon ( ONTY), a clinical-stage biopharmaceutical company focused on the development of therapeutic products for the treatment of cancer. This stock has been blasted by the sellers during the last three months, with shares off by 56%.

If you take a look at the chart for Oncothyreon, you'll notice that this stock has been trading in a tight consolidation pattern for the last month, with shares moving between $1.80 on the downside and $2.15 a share on the upside. This consolidation pattern has come after shares of ONTY gapped down big last December from over $4.50 a share to its recent low of $1.71 a share. Shares of ONTY are now starting to bounce off its recent $1.80 low, and it's quickly moving within range of triggering a breakout trade above the upper-end of its sideways chart pattern.

Traders should now look for long-biased trades in ONTY if it manages to break out above some near-term overhead resistance levels at $2.15 to $2.35 a share and then once it clears more resistance at around $2.40 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 1.61 million shares. If that breakout triggers soon, then ONTY will set up to re-fill some of its previous gap down zone from last December that started near $4.50 a share. Some possible upside targets if ONTY gets into that gap with volume are $3 to $4 a share.

Traders can look to buy ONTY off any weakness to anticipate that breakout and simply use a stop that sits just below some near-term support at $1.80 a share. One can also buy ONTY off strength once it takes out those breakout levels with volume and then simply use a stop that sits just below its 50-day moving average of $2.13 a share.

This stock has big time short-squeeze potential if that breakout triggers soon, since the current short interest as a percentage of the float for ONTY is pretty high at 13.5%. Make sure to put this name on your breakout trading radar for the coming weeks.

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