RSI, Bid Ask Volume Imbalance, and Engulfing Stock Selection

Summary

This stock screen combines three conditions: a 14 period RSI below 65, displayed bid volume greater than ask volume, and a bullish engulfing pattern. The article frames the combination as a way to select shares with relatively favorable technical and order book signals. It describes the RSI threshold as indicating a potentially oversold condition and treats the volume comparison and engulfing pattern as signs of optimistic sentiment or a possible reversal.

The post provides example formula and Python references for applying the screen, but offers no backtest, performance figures, or evidence that the signals predict returns. It acknowledges that the approach omits company financials and business quality, and cautions that engulfing patterns rely on historical prices and cannot forecast future movement by themselves. It suggests adding fundamental assessment and using other indicators to confirm signals. The sample implementation details may require adaptation to the data source and platform, and the screen alone does not specify portfolio sizing or risk controls.

Key ideas

• The screen selects stocks with RSI below 65, bid volume greater than ask volume, and a bullish engulfing pattern.
• The strategy combines a momentum oscillator, displayed order book volumes, and a candlestick signal.
• The post supplies example formula and Python implementations but no backtest results.
• The author warns that technical signals omit company fundamentals and cannot ensure a future reversal.
• Fundamental review and confirmation from additional indicators are suggested as refinements.

Tags

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