We've done testing using the Relative Strength Index on this site before and have been all over the block with it - from RSI(8) to RSI(2). Most recently we have pretty much settled on RSI(2) < 5 as being the killer app for trading purposes and I've made a few coins using the selections generated by that filter. Not randomly but by watching them and their price over price relationships on 4-minute and 15-minute charts. This is the filter that I am currently using for this purpose -
show stocks where close is between 15 and 35
and average volume(90) < 500000
and rsi(2) < 5
and volume 1 day ago > volume 2 days ago
and volume > volume 1 day ago
Some time ago I included the volume relationship criteria because it just made sense to me that it was needed. The test results for this filter are somewhat impressive too = 72% win rate, 3.6 Risk/Reward and 161.22% ROI.
Without the volume criteria the results are good but a little less = 70% win rate, 2.85 Risk/Reward and a 119.4% ROI. These as I said are good but less.
Once again though as a sanity check I reversed the premise of the filter shown above and changed RSI < 5 to RSI > 5. Now the results changed appreciably = 64% win rate, 1.23 Risk/Reward and 36.34% ROI. That kind of proves that the RSI(2) less than 5 is a pretty potent beast.
But what is the RSI? I'm not going to go into the details here because you can find them in many technical analysis books, all over the internet and also here - my favorite quick reference.