5 Stocks Ready for Breakouts

DELAFIELD, Wis. (Stockpickr) -- Trading stocks that trigger major breakouts can lead to massive profits. Once a stock trends to a new high or takes out a prior overhead resistance point, then it's free to find new buyers and momentum players who can ultimately push the stock significantly higher.

Breakout candidates are something that I tweet about on a daily basis. I frequently tweet out high-probability setups, breakout plays and stocks that are acting technically bullish. These are the stocks that often go on to make monster moves to the upside. What's great about breakout trading is that you focus on trend, price and volume. You don't have to concern yourself with anything else. The charts do all the talking.

Trading breakouts is not a new game on Wall Street. This strategy has been mastered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. These pros know that once a stock starts to break out above past resistance levels and hold above those breakout prices, then it can easily trend significantly higher.

With that in mind, here's a look at five stocks that are setting up to break out and possibly trade higher from current levels.

Ocular Therapeutix

One biopharmaceutical stock that's starting to trend within range of triggering a near-term breakout trade is Ocular Therapeutix  (OCUL), which focuses on the development and commercialization of therapies for eye diseases and conditions using its proprietary hydrogel platform technology in the U.S. This stock has been hammered lower by the sellers over the last three months, with shares falling sharply by 44.1%.

If you take a look at the chart for Ocular Therapeutix, you'll see that this stock recently formed a double bottom chart pattern at $21.44 to $21.36 a share. Following that bottom, shares of Ocular Therapeutix have now started to rip to the upside and it's beginning to move within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Ocular Therapeutix if it manages to break out above some key near-term overhead resistance levels at its 50-day moving average of $23.48 and then above $24.41 and over its 200-day moving average of $24.04 to more resistance at $24.82 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 291,961 shares. If that breakout materializes soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $27.51 to $29.39 a share, or even $32 a share.

Traders can look to buy Ocular Therapeutix off weakness to anticipate that breakout and simply use a stop that sits right below those recent double bottom support levels. One can also buy this stock off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Resolute Forest Products


Another stock that's starting to trend within range of triggering a big breakout trade is Resolute Forest Products  (RFP), which operates in the forest products industry in the U.S., Canada and South Korea. This stock has been smacked lower by the sellers over the last three months, with shares trending to the downside by 29.5%.

If you take a glance at the chart for Resolute Forest Products, you'll see that this stock ripped sharply higher on Thursday right above some near-term support at $10.86 a share with monster upside volume flows. Volume for the day registered over 5.9 million shares, which is way above its three-month average action of 443,105 shares. That high-volume move is now starting to push shares of Resolute Forest Products within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in Resolute Forest Products if it manages to break out above some near-term overhead resistance levels at $12 to $12.64 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 443,105 shares. If that breakout begins soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $13.24 to $14.50 a share, or even $15 a share.

Traders can look to buy Resolute Forest Products off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $11 or that recent low of $10.86 a share. One could also buy this stock off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Box

Another application software player that 's starting to trend within range of triggering a major breakout trade is Box  (BOX), which provides a cloud-based enterprise content collaboration platform that enables organizations of various sizes to access, store, share, and manage their content. This stock has been trending higher over the last six months, with shares moving up by 14%. Earlier this week, Box announced a partnership with IBM (IBM).

If you take a glance at the chart for Box, you'll notice that this stock formed a major bottoming pattern over the last three months, with shares finding buying interest each time pulled back to just under $17 a share. Shares of Box have now started to rip higher after gapping to the upside on Wednesday with strong upside volume flows. This move is now quickly pushing shares of Box within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in Box if it manages to break out above some key overhead resistance levels at $20.60 to $20.65 a share and then above $21 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 702,312 shares. If that breakout kicks off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $24.39 a share.

Traders can look to buy Box off weakness to anticipate that breakout and simply use a stop that sits right around its 50-day moving average of $17.48 a share. One can also buy this stock off strength once it starts to trend above those breakout level with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Zogenix


Another stock that's starting to move within range of triggering a major breakout trade is Zogenix  (ZGNX), which develops and commercializes therapies for the treatment of central nervous system disorders in the U.S. This stock has been under selling pressure over the last three months, with shares moving sharply to the downside by 25.7%.

If you take a glance at the chart for Zogenix, you'll notice that this stock has been uptrending over the last month and change, with shares moving higher from its low of $1.32 to its recent high of $1.79 a share. During that uptrend, shares of Zogenix have been making mostly higher lows and higher highs, which is bullish technical price action. This stock recently started to bounce right off its 50-day moving average and that bounce is now quickly pushing this stock within range of triggering a major breakout trade.

Traders should now look for long-biased trades in Zogenix if it manages to break out above some near-term overhead resistance levels at $1.70 to $1.79 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 2.20 million shares. If that breakout develops soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $1.96 to $2.10 a share.

Traders can look to buy Zogenix off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $1.53 a share. One can also buy this stock off strength once it starts to move above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

FXCM


My final breakout trading prospect is currency player FXCM  (FXCM), which provides online foreign exchange trading and related services to retail and institutional customers worldwide. This stock has been destroyed over the last six months, with shares collapsing by 90%.

If you look at the chart for FXCM, you'll notice that this stock has been uptrending over the last month and change, with shares moving higher from its low of $1.22 to its recent high of $1.75 a share. During that uptrend, shares of FXCM have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a major breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in FXCM if it manages to break out above some key near-term overhead resistance levels at its 50-day moving average of $1.71 to $1.75 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 2.42 million shares. If that breakout triggers soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $2.16 to $2.31 a share, or even $2.79 a share.

Traders can look to buy FXCM off weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support at $1.43 a share. One can also buy this stock off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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