5 Stocks Poised for Breakouts
With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels.
One stock that's trading within range of a major breakout trade is Merge Healthcare (MRGE) , which develops software solutions that facilitate the sharing of images to create an electronic healthcare experience for patients and physicians. This stock has been hit hard by the sellers, with shares off by over 40% so far in 2012.
If you take a look at the chart for Merge Healthcare, you'll notice that this stock was taken to the woodshed by the bears, after it fell from its March high of $6.65 to a recent low of $2.20 a share. During that sharp move lower, shares of Merge Healthcare consistently made lower highs and lower lows, which is bearish technical price action. That said, this stock has started to form a bottoming process during the last two months at around $2.20 to $2.36 a share. This stock is also now moving within range of triggering a near-term breakout trade.
Traders should look for long-biased traders in MRGE if it can manage to trigger a breakout above some near-term overhead resistance at $2.95 a share with high volume. Look for a sustained move or close above $2.95 with volume that registers near or above its three-month average action of 1 million shares. If we get that action soon, then MRGE could easily re-fill a previous gap-down from May and trade up toward $4 to $5 a share.