RSI thresholds: real reversal, arbitrary numbers
Short-horizon reversal is a documented return regularity — the statistical soil oscillators grow in. The specific 30/70 levels are Wilder's round numbers. Sweep the whole entry × exit threshold surface and watch where the best cell actually lands.
Self-contained simulation on randomly generated synthetic data — not market data, not a live signal, and not a record of trading. It runs entirely in your browser; nothing is sent anywhere. Educational information only — not investment advice. Hypothetical backtested results; past performance does not guarantee future results. Trading involves risk of loss. Full-page version, with the findings and citations
What the research actually found
The support rating below is the same one this concept carries in our research corpus, and the quoted findings are the corpus text — not a summary written to flatter the simulation. Every citation was verified against its source.
Oscillators & overbought/oversold (RSI, stochastic, MACD-as-oscillator)
also called: RSI 30/70, mean-reversion timing, 'overbought bounce'
Where it comes from. RSI, ATR and ADX come from J. Welles Wilder's 1978 trade book — engineering heuristics, never peer-reviewed at birth. The phenomenon they gesture at, short-horizon reversal, IS academic: securities that fell over days-to-a-month tend to bounce (Jegadeesh 1990; Lehmann 1990).
What the research supports. Short-term reversal is a real, strongly significant return regularity (Jegadeesh 1990; Lehmann 1990) — the statistical soil oscillators grow in. On 60 years of the London FT30, mechanical RSI and MACD rules beat buy-and-hold before costs in most specifications (Chong & Ng 2008).
What it does not support. The reversal profits live in small, high-turnover trades that transaction costs consume — Lehmann himself flagged the cost sensitivity — and the specific 30/70 thresholds have no derivation; they are Wilder's round numbers. No robust study validates RSI levels as a standalone profitable signal in modern, cost-realistic conditions.
Sources: Wilder (1978) · Jegadeesh (1990) · Lehmann (1990) · Chong & Ng (2008) · full concept-by-concept evidence
Also embedded on
4 sources — all verified
- Wilder, J. Welles (1978). New Concepts in Technical Trading Systems. Trend Research. [Origin of RSI/ATR/ADX — a practitioner book, not peer-reviewed; listed for provenance.]
- Jegadeesh, Narasimhan (1990). “Evidence of Predictable Behavior of Security Returns.” Journal of Finance, 45(3), 881–898.
- Lehmann, Bruce N. (1990). “Fads, Martingales, and Market Efficiency.” Quarterly Journal of Economics, 105(1), 1–28.
- Chong, Terence Tai-Leung, & Ng, Wing-Kam (2008). “Technical analysis and the London stock exchange: testing the MACD and RSI rules using the FT30.” Applied Economics Letters, 15(14), 1111–1114.
This simulation demonstrates a mechanism on synthetic data; it does not reproduce any paper's dataset or reported magnitudes. Educational information only — not investment advice. Educational information only — not investment advice. Hypothetical backtested results; past performance does not guarantee future results. Trading involves risk of loss. See the methodology and the full disclaimer.
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