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Pullbacks scan

20 EMA Bounce Screener

This scan finds stocks whose low went below the 20-day exponential moving average (EMA) but whose close finished back above it, while the 20 EMA is above the 50-day SMA.

Run this scan in the live demoFree, no sign-up. The demo uses made-up sample data.

The exact rule

Type this in Chalni: low below 20 ema and close above 20 ema and 20 ema above 50 day sma

  1. Low < EMA(20)
  2. Close > EMA(20)
  3. EMA(20) > SMA(50)

Find US stocks where today's low is below the 20-day exponential moving average; and the closing price is above the 20-day exponential moving average; and the 20-day exponential moving average is above the 50-day simple moving average.

Formula view
low < ema(close, 20)
AND close > ema(close, 20)
AND ema(close, 20) > sma(close, 50)
Example chart: Bounce off the 20 EMADaily candles of a made-up sample stock with 20-day EMA; 50-day SMA. The shaded day is the day the scan fired.
  • 20-day EMA
  • 50-day SMA
  • Shaded day: the scan fired
Example from Chalni's made-up sample market, not a real stock. It shows the most recent time this scan fired in the sample US market, picked whether or not the trade worked.

What it means

In a steady uptrend, many stocks pull back to their 20-day EMA again and again, and buyers step in there. A day that trades below the line and then closes above it shows those buyers did step in.

The extra rule, 20 EMA above the 50-day SMA, makes sure the stock is trending up. You are buying support in an uptrend, not catching a falling knife.

How traders use it

  • A classic entry for swing traders in leading stocks.
  • Many traders use the day's low as the stop: if price breaks it, the bounce failed.
  • It works best in stocks that have bounced off the 20 EMA before.

Watch out for

  • The more often a stock tests the line, the weaker the support can get.
  • In fast-falling markets, dips below the EMA often keep going the next day.

Test it before you trust it

Every scan in Chalni sits an exam. First it runs on older data, the practice: each time it picks a stock, the stock is held for 10 trading days and 0.2% is paid in costs. Then it runs on newer data it has never seen, the exam. A scan that only works in practice has just memorised the past.

See the practice and exam results for this scan in the demo (on sample data; real data comes at launch).

Questions

Why the 20-day EMA?

It follows the price closely and many short-term traders watch it, so it often acts as support in strong trends.

What is the difference between an EMA and an SMA?

An SMA gives every day the same weight. An EMA gives more weight to recent days, so it reacts faster to new prices.

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