These stocks are trading in a tight price range which can’t last for long. A breakout could result in the next major move of the trend.

Tetraphase Pharmaceuticals, Inc. (TTPH ) is a great example. After the stock more than doubled between late August and early October, it has been moving choppily sideways since mid-October. While the recent consolidation looks small compared to the recent rally, it’s actually anything but. The price has been swinging 5% to 10% daily while in this range, with a number of a false breakouts having already occurred. This stock isn’t for the faint of heart. A rise above $24.75 breaks a very short-term descending trendline, giving a bullish signal and near-term price target of $28, with a longer-term target at $29.50.The October high is at $26.34, though, and given the choppy nature of the stock, the breakout isn’t confirmed until the price has a daily close beyond that. A drop below $23, if legitimate, goes against the dominant trend ; look for a test of the $21.75 region. (For more, see: Capitalize on False Breakouts in the Danger Zone .)

Palo Alto Networks, Inc. (PANW ) is hovering just below resistance at $108.50 since the start of October. With a long-term uptrend in play, a break above that level signals a continuation, and an initial target of $117. A drop back below the Nov. 5 low at $102.02 signals the consolidation may be breaking to the downside. Look for a test of the multi-month trend channel bottom near $95. If the price bounces off the channel bottom it’s a buying opportunity. Price target is the same as above. (For more, see: 4 Stocks Awaiting Strong Breakouts .)

Chimerix, Inc. (CMRX ) is already near the bottom of its longer-term upward trend channel and consolidating there. The price is getting squeezed against that channel by a short-term downward channel. If the price breaks above $31.75, it’s a bullish sign as the short-term downward channel is broken. A conservative price target is $35, with a more aggressive target at $37, just slightly beyond the October high ($36.75). If the price continues to fall below $27.50 the uptrend is in jeopardy. It doesn’t warrant taking a short trade, but buyers holding the stock should be aware that a deeper decline could ensue. (For more, see: Consolidations Leading to Upside Breakouts? )

Lakeland Industries, Inc. (LAKE ), which develops hazmat suits, saw spectacular volatility in early to mid-October as Ebola fears escalated and declined, along with its stock price. Since the start of November, its share price has been moving in a small downward trend channel, but in recent sessions has respected a $12.80 support zone. If that’s breached, look for lower prices in the short-term. The next support is at $11.80, followed by $9.20 then $7.60. A lot of buyers who purchased above $15 are hurting, which makes the likelihood of this stock getting back above $25 remote, unless there’s a major health crisis. A rally back above $15 breaches the Nov. 5 high (plus a small buffer), potentially pushing the stock to resistance near $17. If that’s surpassed, there’s little resistance until near $20, followed by $24. (For more, see: Range-bound Traders, Breakout Traders, Channel Traders .)

The Bottom Line

Tight consolidations provide great trade candidates, especially when surrounded by volatility. A tight consolidation usually doesn’t last too long, which means a bigger move will eventually ensue. There are a few things to consider though. False breakouts are the main concern. Don’t be wedded to a position; if the breakout fails, it fails. Cut losses and look for the next opportunity. Another issue is that the price could continue to drift and the big move never comes. This may still be a profitable scenario, but the trade takes longer and provides less reward than originally anticipated. Also, keep the whole context of the consolidation in mind when trading breakouts. If the breakout goes against the dominant trend, be more leery and temper expectations. Note significant support and resistance levels that stand between the entry and the target price; these can help you assess the probability of the trade. (For more, see: Tight Consolidation Breakouts to Watch .)