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, 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 I love to trade.

I frequently flag high-probability setups, breakout plays and stocks that are acting technically bullish. These are the ones 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, 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.

Calithera Biosciences

One clinical-stage biopharmaceuticals player that's starting to move within range of triggering a near-term breakout trade is Calithera Biosciences (CALA) , which focuses on discovering and developing small molecule drugs directed against tumor metabolism and tumor immunology targets for the treatment of cancer in the U.S. This stock has been hammered by the sellers over the last six months, with shares falling sharply by 47%.

If you take a look at the chart for Calithera Biosciences, you'll notice that this stock recently formed a double-bottom chart pattern, after shares found some buying interest at $2.90 to $2.87 a share over the last four months. Following that potential bottom, this stock has now started to trend a bit higher off those support levels, 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 Calithera Biosciences, if it manages to break out above some near-term overhead resistance levels at $3.06, to its 50-day moving average of $3.14, then above more resistance at $3.20 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 194,875 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 $3.40 to $3.66, or even $3.85 to $4 a share.

Traders can look to buy Calithera Biosciences off weakness to anticipate that breakout and simply use a stop that sits right around those recent double-bottom support levels. One can 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.

Tonix Pharmaceuticals

A health care player that's starting to spike within range of triggering a big breakout trade is Tonix Pharmaceuticals (TNXP) , which engages in developing medicines for common disorders of the central nervous system. This stock has been destroyed by the sellers over the last six months, with shares plunging lower by 75.5%.

If you take a glance at the chart for Tonix Pharmaceuticals, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at 60 cents to 61 cents over the last few weeks. Following that potential bottom, this stock has now started to spike higher and flirt with its 20-day moving average of 68 cents a share. That move is now quickly pushing shares of Tonix Pharmaceuticals within range of triggering a big breakout trade above some near-term overhead resistance levels.

Traders should now look for long-biased trade in Tonix Pharmaceuticals, if it manages to break out above some near-term overhead resistance levels at 69 cents to 70 cents per share and then above more resistance at 74 cents to 75 cents 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 982,062 shares. If that breakout fires off soon, this stock will set up to re-test or possibly take out its next major overhead resistance levels at 85 to 86 cents, or even 90 cents to $1.10 a share. Any high-volume move above $1.10 will give this stock a chance to refill some of its previous gap-down-day zone from September that started at $2.30 a share.

Traders can look to buy Tonix Pharmaceuticals off weakness to anticipate that breakout and simply use a stop that sits right below those recent double-bottom support levels. One could 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.

Editas Medicine

Another biotechnology player that's starting to spike within range of triggering a near-term breakout trade is Editas Medicine (EDIT - Get Report) , which operates as a genome editing company. This stock has been smacked lower by the bears over the last six months, with shares falling sharply by 65%.

If you take a glance at the chart of Editas Medicine, you'll notice that this stock recently formed a double-bottom chart pattern, after shares found some buying interest at $13.10 to $13.03 a share over the last few weeks. Following that potential bottom, shares of Editas Medicine have now started to spike higher and flirt with its 20-day moving average of $14.03 a share. That spike is now quickly pushing this stock within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Editas Medicine if it manages to break out above some near-term overhead resistance levels at $14.32 to around $15 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 304,491 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 levels at its 50-day moving average of $15.98 a share to $16.42, or even $17.65 to $18.45 a share.

Traders can look to buy Editas Medicine off weakness to anticipate that breakout and simply use a stop that sits just 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.

Rentech

Another basic materials player that's starting to trend within range of triggering a big breakout trade is Rentech (RTK) , which provides wood fiber processing services, wood chips and wood pellets. This stock has been under notable selling pressure over the last six months, with shares off by 15.9%.

If you take a glance at the chart for Rentech, you'll notice that this stock has been downtrending badly over the last two months, with shares falling sharply off its high of $3.97 a share to its recent low of $2.60 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 Rentech have now started to spike higher off that $2.60 low, and it's started to move back above both its 200-day moving average of $2.72 a share and its 20-day moving average of $2.83 a share. That rebound is now quickly pushing shares of Rentech within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Rentech, if it manages to break out above some near-term overhead resistance levels at $2.90 to $3, then above more resistance at $3.09, 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 136,662 shares. If that breakout takes hold soon, 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 $3.22 to $3.50, or even $3.86 to $4 a share.

Traders can look to buy Rentech off weakness to anticipate that breakout and simply use a stop that sits just below some near-term support levels at $2.73 to $2.60 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.

ProNAi Therapeutics

My final breakout trading prospect is clinical-stage oncology player ProNAi Therapeutics (DNAI) , which develops and commercializes drugs based on its DNA interference (DNAi) technology platform for patients with cancer and hematological malignancies. This stock was smashed by the bears over the last six months, with shares plunging lower by 70%. 

If you look at the chart for ProNAi Therapeutics, you'll notice that this stock has been consolidating and trending sideways over the last five months, with shares basically moving between $1.70 on the downside and $2.25 on the upside. Shares of ProNAi Therapeutics have experienced a number of unusual high-volume spikes to the upside over the last few week that have pushed the stock right into some key moving averages, and into range of breaking out above some key overhead resistance levels.

Traders should now look for long-biased trades in ProNAi Therapeutics, if it manages to break out above both its 20-day moving average of $1.83 a share and its 50-day moving average of $1.86 a share with volume that hits near or above its three-month average action of 705,168 shares. If that breakout develops soon, this stock will set up to re-test or possibly take out its next major overhead resistance levels at $1.93 to $2.07, or even $2.25 a share. Any high-volume move above $2.25 will then give this stock a chance to make a run at its gap-down day high from June, near $3.

Traders can look to buy shares of ProNAi Therapeutics off weakness to anticipate that breakout and simply use a stop that sits just below $1.70 a share. One can also buy this stock off strength once it starts to move above those breakout levels with volume, then simply use a stop that sits a conformable percentage from your entry point.

T his article is commentary by an independent contributor. At the time of publication, author held a long equity position in shares of DNAI.