Understanding the RSI Oversold Stocks scan

The Relative Strength Index (RSI) is a momentum oscillator developed by J. Welles Wilder that measures the speed and magnitude of recent price changes on a 0–100 scale. A 14-period RSI below 30 is the classic definition of an 'oversold' market: selling pressure has been so persistent that price may have stretched too far below its recent average. This screener scans the full universe every completed daily candle and returns only the stocks whose RSI(14) is currently under 30.

Oversold does not automatically mean 'cheap' or 'about to bounce'. In strong downtrends, RSI can stay pinned below 30 for weeks while price keeps falling — a phenomenon traders call 'embedded' readings. That is why most practitioners use an oversold scan as a watchlist builder rather than an entry trigger: the interesting moment is usually when RSI turns back up from the oversold zone, ideally alongside a supportive candle pattern or rising volume.

Mean-reversion traders pair this scan with support levels, previous swing lows or a falling-wedge structure, while trend traders use it in reverse — a stock in a long-term uptrend that dips to oversold on the daily chart is often a pullback candidate rather than a broken story. Checking the 200 EMA position of each match is a quick way to separate the two situations.

How to use this scan

• Treat the list as a watchlist of stretched stocks, not a basket of buys.
• Open each chart and check whether price is above or below the 200 EMA — pullbacks in uptrends behave very differently from breakdowns.
• Wait for a confirmation signal such as RSI crossing back above 30, a bullish engulfing candle or a higher low before acting.
• Cross-check volume: capitulation-style spikes often mark better reversal zones than quiet drifts lower.
• Re-run the scan after each daily close — RSI values change with every completed candle.