Screening for Reversal Candles Near the 10-Day Moving Average

Summary

This Chinese stock-screening proposal combines daily range, a reversal pattern, and the opening price's distance from the 10-day moving average. Its criteria call for a range above 1%, a recent reversal or engulfing-style pattern, and an open within roughly 2% of the moving average. The post frames range as a way to find active stocks, the pattern as a possible reversal signal, and the moving-average condition as a short-term trend filter. It also suggests adding valuation measures such as price-to-earnings or price-to-book ratios.

Formula and Python examples are included, but their definitions of range and reversal are not fully consistent with the prose, and the Python sample introduces an additional positive-return condition. No historical performance, trading rules for exits, or transaction-cost analysis is reported. The author cautions that technical-only screening can concentrate picks and omit fundamental information, and recommends parameter variation and broader analysis. These criteria are a candidate filter, not evidence of a profitable strategy.

Key ideas

• The proposed screen combines daily range, a recent reversal pattern, and an opening price near the 10-day moving average.
• The moving-average distance is bounded at about 2% above or below the average.
• The post recommends adding fundamental measures and varying thresholds to improve the screening process.
• The formula and Python examples operationalize some conditions differently, so the definitions need reconciliation.
• No backtest results, exits, or cost analysis are supplied.

Tags

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