Oversold bounce above 200 day average
This is a mean reversion strategy on liquid large cap stocks using a daily chart. It buys oversold conditions when price is above the 200 day moving average, and exits on a short term bounce or after a fixed time, with...
Market Stocks
Style Mean reversion
Timeframe Swing 4h-1D (1d)
Level Advanced
Tools SMA, RSI, ATR
Saved 1 time
Run 0 times Tested
Testing needs market data for this symbol. Past results do not guarantee future results.
The rules
Setup Lane (first to light up) Lane: stocks Instrument(s) liquid large caps like AAPL and MSFT Primary timeframe daily Higher-timeframe filter (optional) Higher-timeframe filter: price above 200 day SMA Fast EMA length not given Slow EMA length not given Trend rule (exact) Trend rule: price above 200 day simple moving average Momentum confirmation (optional) Momentum confirmation: not given
Trigger Pullback definition 2 period RSI closes below 10 Pullback invalidation (when the setup is dead) Pullback invalidation: not given
Entry Entry trigger buy when 2 period RSI closes below 10 Entry buffer (ticks/pips) Entry buffer: not given Order type not given
Stop Initial stop 2 times ATR 14 below entry ATR length (if ATR stop) ATR length: 14 ATR multiple 2
Exit Trailing stop method not given Profit target (optional) Profit target: not given Time / session exit (optional) Time / session exit: exit after 10 days
Risk Risk per trade 1% Max concurrent positions 4 Daily loss limit / kill switch not given Max risk per lane (optional) Max risk per lane: not given
Strengths Filters to uptrends with the 200 day moving average, which can avoid catching falling knives in bear markets. Uses a very oversold RSI trigger, which historically can precede short term bounces in strong stocks. Defined risk with a 2 ATR stop and fixed 1% risk per trade, plus a cap on concurrent positions. Clear exit rules: close above the 5 day average or a 10 day time limit, which removes discretion. Risks The 2 period RSI below 10 is rare, so you may get few signals and miss many opportunities. A stock can keep falling after the entry, and the 2 ATR stop may be hit before any bounce, especially in a sharp selloff. The 10 day time exit can force you out at a loss even if the stock later recovers, and the 5 day average exit may give back gains quickly. Correlated large caps like AAPL and MSFT can fall together, so 4 positions may not diversify away market wide risk. Source
A JustWavey pick: a well known public strategy, written out in plain words by the JustWavey team.
Version history
Version Saved Changed boxes 1 2026-10-17 First version
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