Trade These 5 Biotech Breakouts Now for Big Gains

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. These are also the exact type of stocks that I love to trade and alert to my subscribers in real-time.

I frequently flag 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.

BioPharmX

One specialty pharmaceutical player that's starting to spike within range of triggering a major breakout trade is BioPharmX  (BPMX) , which focuses on the development of novel drug delivery products for women's health and dermatology markets. This stock has been smashed lower by the sellers over the last three months, with shares off sharply by 22.2%.

If you take a look at the chart for BioPharmX, you'll notice that this stock ripped sharply higher on Thursday right above its new 52-week low of 50 cents per share with strong upside volume flows. Volume for that trading session registered over 217,000 shares, which is well above its three-month average action of 51,851 shares. This high-volume move to the upside is now quickly pushing shares of BioPharmX within range of triggering a major breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in BioPharmX if it manages to break out above some near-term overhead resistance levels at its 50-day moving average of 64 cents per share to 65 cents and then above key resistance at 68 cents per 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 51,851 shares. If that breakout hits soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at 80 to 83 cents, or even 95 to $1 a share.

Traders can look to buy BioPharmX off weakness to anticipate that breakout and simply use a stop that sits right around its new 52-week low of 50 cents per 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.

Regenxbio

A biotechnology player that's starting to move within range of triggering a big breakout trade is Regenxbio  (RGNX) , which focuses on the development, commercialization and licensing of recombinant adeno-associated virus gene therapy. This stock has been smacked lower by the bears over the last six months, with shares dropping sharply lower by 37.3%.

If you take a glance at the chart for Regenxbio, you'll notice that this stock has been downtrending badly over the last two months, with shares falling sharply lower off its high of $13.77 a share to its new 52-week low of $7.07 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 Regenxbio have now started to rebound off that $7.07 low, and it's beginning to trend within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trade in Regenxbio if it manages to breakout above its 20-day moving average of $7.99 a share and then above more near-term overhead resistance levels at $8.25 to $8.40 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 167,270 shares. If that breakout fires off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $9 to $9.75, or even $10 to its 50-day moving average of $10.17 a share.

Traders can look to buy Regenxbio off weakness to anticipate that breakout and simply use a stop that sits right around its new 52-week low of $7.07 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.

Intercept Pharmaceuticals

Another biopharmaceutical player that's starting to trend within range of triggering a big breakout trade is Intercept Pharmaceuticals  (ICPT) , which focuses on the development and commercialization of therapeutics to treat non-viral, progressive liver diseases. This stock has been in play with the bulls over the last six months, with shares soaring higher by 36.4%.

If you take a glance at the chart of Intercept Pharmaceuticals, you'll notice that this stock has been uptrending over the last month and change, with shares moving higher off its low of $130.04 a share to its recent high of $156.31 a share. During that uptrend, this stock has been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of Intercept Pharmaceuticals within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Intercept Pharmaceuticals if it manages to break out above Thursday's intraday high of $154.26 a share and then above more near-term overhead resistance at $156.31 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 519,945 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 $165 to $170, or even $173.50 to $175 a share.

Traders can look to buy Intercept Pharmaceuticals off weakness to anticipate that breakout and simply use a stop that sits right around its 200-day moving average of $144.75 a share or near more support at $144 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.

Lipocine

Another specialty pharmaceutical player that's starting to spike within range of triggering a big breakout trade is Lipocine  (LPCN) , which develops pharmaceutical products using its oral drug delivery technology in the areas of men's and women's health. This stock has been destroyed by the bears over the six months, with shares collapsing lower by 60.4%.

If you take a glance at the chart for Lipocine, you'll notice that this stock ripped sharply higher on Thursday right above some near-term support at $3.16 a share with decent upside volume flows. This trend to the upside managed to push shares of Lipocine into breakout territory, since the stock took out some near-term overhead resistance at $3.44 a share. This move is now quickly pushing shares of Lipocine within range of triggering a much bigger breakout trade that could send the stock soaring into its previous gap-down-day zone from June.

Traders should now look for long-biased trades in Lipocine if it manages to break out above Thursday's intraday high of $3.71 a share and then once it clears more key resistance levels at $3.86 to its 20-day moving average of $4.01 a share with high volume. Look for a sustained move or close above those levels with volume that hit near or above its three-month average action of 520,775 shares. If that breakout develops soon, then this stock will set up to re-fill some of its gap-down-day zone from June that started near $7.50 a share.

Traders can look to buy Lipocine off weakness to anticipate that breakout and simply use a stop that sits right around Thursday's intraday low of $3.32 a share or near more key support at $3.16 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 comfortable percentage from your entry point.

Accuray

My final breakout trading prospect is Accuray  (ARAY) , which designs, develops and sells radiosurgery and radiation therapy systems for the treatment of tumors in the body. This stock has been under modest selling pressure over the last six months, with shares off by 7.7%.

If you look at the chart for Accuray, you'll notice that this stock spiked modestly higher on Thursday right off its 50-day moving average of $5.25 a share with strong upside volume flows. Volume for that trading session registered over 934,000 shares, which is well above its three-month average action of 674,973 shares. This high-volume trend to the upside is now quickly pushing shares of Accuracy within range of triggering a big breakout trade above a key downtrend line that dates back to April.

Traders should now look for long-biased trades in Accuray if it manages to break out over that key downtrend line that will trigger above some near-term overhead resistance levels at $5.40 to $5.50 a share with volume that hits near or above its three-month average action of 674,973 shares. If that breakout fires off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $5.70 to its 200-day moving average of $5.78, or even $6.20 to $6.33 a share.

Traders can look to buy shares of Accuray off weakness to anticipate that breakout and simply use a stop that sits right below its 20-day moving average of $5.18 a share or around more key support at $4.90 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 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.

More from Opinion

The Good, the Bad, and the Unknowns of AI and Apple Watches

The Good, the Bad, and the Unknowns of AI and Apple Watches

Flashback Friday: Bye Bye FAANG

Flashback Friday: Bye Bye FAANG

Micron Slumps After Issuing Light Guidance: 7 Key Takeaways

Micron Slumps After Issuing Light Guidance: 7 Key Takeaways

Throwback Thursday: Let's Talk Tilray

Throwback Thursday: Let's Talk Tilray

Amazon's Reported Plans to Greatly Expand Its Cashier-Free Stores: 5 Takeaways

Amazon's Reported Plans to Greatly Expand Its Cashier-Free Stores: 5 Takeaways