Connors RSI

Connors RSI is a mean-reversion strategy for range-bound markets on daily bars. It buys when Larry Connors' composite oscillator reads deeply oversold (CONNORSRSI(3) < 20) and exits when the same oscillator reads overbought (> 80) — a pure indicator exit, with no price level or band involved. It is the fast, composite sibling of RSI Mean-Reversion: where a standard RSI(14) reads only price momentum, Connors RSI blends three distinct reads of "stretched", which is why it turns much faster and, in Connors' research, screens short-term extremes better than standard RSI in many markets.

It is a medium, range-bound, daily strategy for swing trading.

How it trades

Connors RSI is the equal-weight average of three 0–100 components, each answering a different question about today's move:

The streak counts consecutive closes in one direction (+1, +2, … up; −1, −2, … down; 0 on unchanged), and the percent-rank scores today's return against the previous 100 — so a crash day ranks near 0 and a surge near 100 regardless of the stock's usual volatility. Averaging the three means a reading below 20 requires price weakness, a persistent down-run and an outsized down day together; no single component can trigger it alone.

Buy (deeply oversold):

CONNORSRSI(3) < 20

Sell (overbought — the snap-back has run):

CONNORSRSI(3) > 80

When it works best

Best on range-bound, liquid names that oscillate and reliably snap back — defensive pharma and regulated PSU utilities in the Indian context — where short, sharp sell-offs are absorbed within days. Its stated weakness is strong trends: in a persistent downtrend the oscillator keeps reaching oversold while price keeps falling, and each dip-buy is early; the indicator exit (rather than a stop) means the position simply waits for a bounce that a trending market may not give. A trend filter (e.g. only buy above the 200-day SMA) is the standard Connors-style hardening.