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.

Engility

One stock that's starting to spike within range of triggering a big breakout trade is Engility  (EGL) , which provides various engineering, technical, analytical, advisory, training, logistics and support services worldwide. This stock has been smashed lower by the sellers over the last three months, with shares off big by 59.5%.

If you take a look at the chart for Engility, you'll notice that this stock ripped notably higher on Thursday right above some near-term support at $13.10 a share and above its 20-day moving average of $12.88 a share with decent upside volume flows. This spike to the upside pushed shares of Engility into breakout territory, since the stock closed above some near-term overhead resistance at $13.99 a share. That move is now quickly pushing this stock within range of triggering a much bigger breakout trade.

Traders should now look for long-biased trades in Engility if it manages to break out above some key near-term overhead resistance levels at $14.50 to right around $15.50 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 273,669 shares. If that breakout fires off soon, then this stock will set up to re-fill some of its previous gap-down-day zone from January that started just above $24 a share.

Traders can look to buy Engility off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $13.10 or its 20-day moving average of $12.88 a share. 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.

 

BioCryst Pharmaceuticals

A biotechnology player that's starting to rip within range of triggering a major breakout trade is BioCryst Pharmaceuticals  (BCRX - Get Report) , which  designs, optimizes, and develops small molecule drugs that block key enzymes involved in the pathogenesis of diseases. This stock has been annihilated by the bears over the last six months, with shares plunging lower by 81.7%.

If you take a glance at the chart for BioCryst Pharmaceuticals, you'll notice that this stock gapped-down sharply lower early this month from around $7 a share to under $2 a share with heavy downside volume flows. Following that move, this stock has now started to stabilize and trend sideways between $1.63 on the downside and $2.27 on the upside. Shares of BioCryst Pharmaceuticals spiked sharply higher on Thursday right above some near-term support at $1.74 a share with decent upside volume flows. This move is now quickly pushing this stock within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trade in BioCryst Pharmaceuticals if it manages to break out above Thursday's intraday high of $2.04 a share and then once it clears more key resistance levels at $2.20 to $2.27 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 1.13 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 level at its gap-down-day high of $2.43 a share. Any high-volume move above that level will then give this stock a chance to re-fill some of its previous gap-down-day zone that started near $7 a share.

Traders can look to buy BioCryst Pharmaceuticals off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $1.74 a share or near its new 52-week low of $1.63 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.

Encore Capital Group

Another stock that's starting to rip within range of triggering a big breakout trade is Encore Capital Group  (ECPG - Get Report) , which provides debt recovery solutions for consumers and property owners across a range of financial assets worldwide. This stock has been under heavy selling pressure over the last six months, with shares falling sharply by 42.9%.

If you take a glance at the chart for Encore Capital Group, you'll notice that this stock spiked sharply higher on Thursday right above some near-term support at $17.94 a share and back above its 20-day moving average of $21.11 a share with strong upside volume flows. Volume for that trading session registered over 817,000 shares, which is well above its three-month average action of 410,402 a shares. This high-volume spike to the upside is now quickly pushing shares of Encore Capital Group within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Encore Capital Group if it manages to break out above some near-term overhead resistance levels at $22 to $22.72 a share and then above $22.98 to its 50-day moving average of $23.68 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 410,402 shares. If that breakout takes hold soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $26 to $28, or even $30 to $32 a share.

Traders can look to buy Encore Capital Group off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $17.94 a share. One can also buy this stock off strength once it starts to trend above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

LPL Financial

Another stock that's starting to move within range of triggering a big breakout trade is LPL Financial  (LPLA - Get Report) , which provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions in the U.S. This stock has been slammed lower by the sellers over the last six months, with shares down big by 49.6%.

If you take a glance at the chart for LPL Financial, you'll notice that this stock recently gapped-down sharply lower from around $26 a share to its new 52-week low of $15.38 a share with monster downside volume flows. Following that move, this stock has started to rebound off that $15.38 low with a number of strong upside volume days. Shares of LPL Financial trended modestly higher on Thursday right above some near-term support at $17.90 a share with strong upside volume flows. Volume for that trading session registered over 1.73 million shares, which is well above its three-month average action of 1.34 million shares. This high-volume spike to the upside is now quickly pushing this stock within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in LPL Financial if it manages to break out above some near-term overhead resistance levels at $21 to $21.10 a share and then above more resistance at $21.63 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 1.34 million shares. If that breakout develops soon, then this stock will set up to re-fill some of its previous gap-down-day zone that started near $26 a share.

Traders can look to buy LPL Financial off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $17.90 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.

Zynerba Pharmaceuticals

My final breakout trading idea is specialty pharmaceutical player Zynerba Pharmaceuticals  (ZYNE - Get Report) , which focuses on developing and commercializing proprietary synthetic cannabinoid therapeutics formulated for transdermal delivery. This stock has been destroyed by the bears over the last six months, with shares collapsing by 74.2%.

If you look at the chart for Zynerba Pharmaceuticals, you'll notice that this stock has been downtrending badly over the last five months, with shares collapsing off its high of $18.25 a share to its new 52-week low of $4.64 a share. During that downtrend, this stock has been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of Zynerba have now started to rebound off that $4.64 low, and it's beginning to move within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Zynerba Pharmaceuticals if it manages to break out above some near-term overhead resistance levels at $6.21 to $6.50 a share and then above more resistance at $6.64 to $7.07 a share with volume that hits near or above its three-month average action of 73,446 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 $7.50 to $8, or even its 50-day moving average of $8.39 to over $9 a share.

Traders can look to buy shares of Zynerba Pharmaceuticals off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $5.17 a share. One can also buy this stock off strength once it starts to trend above those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

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