A Chinese Stock Screen Using Reversal Candles and Recent Weakness

Summary

This document describes a Chinese equity screening rule combining daily range, a reversal condition, three consecutive down days, and a comparison of recent highs with a longer lookback period. Its final version also requires the highest price over the last 10 trading days to be below the highest price over the last 50 days. The article provides example indicator expressions and Python-style logic for applying these filters to price data, then sorting candidates by a heat ranking.

The method is presented as a technical screen, not as a complete trading system. The document gives no backtest results, performance measures, or entry and exit rules. It acknowledges that price-only filters omit fundamental and macroeconomic information and may produce biased selections. Its sample implementations also appear inconsistent in places: the listed reversal condition and the candle-pattern function may not match the plain-language description exactly. Any practical use would require checking the definitions and testing the screen against appropriate data.

Key ideas

• The screen combines a minimum daily high-low range with a reversal condition and three consecutive declining closes.
• It adds a filter requiring the recent 10-day high to be below the 50-day high.
• The article sketches implementations using both indicator expressions and historical price series.
• It provides no evidence of profitability and warns that technical filters omit fundamental and macroeconomic factors.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.