SMA / EMA bounceSMA 50 · EMA 200 · Williams %R oversold

In plain English. SMA / EMA bounce finds stocks in an intact uptrend that have pulled back to a rising 50-day simple or 200-day exponential moving average. The average must already have stopped declines at least 2 times in the past year. Williams %R(14) must also show that short-term selling is exhausted.

Why it works. The 50- and 200-day averages are the most watched trend levels in the market. Many funds use them to add to positions or to manage risk. A rising average that has caught the stock before acts as a moving trendline. Price reaching it while oversold often means the dip is close to its end, not the trend.

How to use it. The SMA 50 version suits active trend traders, and the EMA 200 version suits deeper, slower entries. Wait for the bounce candle. A daily close clearly below the average is the exit.