Oversold in an Uptrend

This system uses Wilder’s Relative Strength Index (RSI) and volatility to detect oversold stocks in an uptrend and tries to buy at the bottom hoping to profit from the inevitable rebound.
To establish whether the stock is in an uptrend I used Linear regression, my custom Volume flow Indicator and a number of other conditions. In the following example below the system detected on the 5th of February 2018 that Adobe (ADBE) was oversold in an uptrend. As you can see the stock was up more than 11% during the next 2 weeks


Overbought in a Downtrend

This system will detect overbought stocks in a downtrend and tries to go short at the top (hopefully) to profit from the reversion to the previous trend. In the following example below the system detected that Lufax Holding Ltd (LU) was overbought in a downtrend 2 times during the last year.

Both systems were designed for daily charts and are available for the Amibroker and Metastock platforms.



chart formation systems

Test Parameters

Test date: March 6th, 2020
Commissions : 1 cent per share
Trade amount per stock: $25000 with no margin or compounding.
Initial capital: $150,000