1. The Left-Side Falling Knife Trap
Every cycle, retail traders anchor to a stock's former all-time high. When a former darling drops -35%, it looks like a bargain. Yet without trend confirmation, buying below a falling 60-day moving average (MA60) exposes capital to multi-year structural value traps—think legacy turnarounds that bleed another -45% while the Nasdaq compounds without you.
2. Four Mathematical Gates of Post-Washout Right-Side Ignition (PW-RSI)
Across our 26.8-year backtest (2000–2026), the PW-RSI composite score requires four simultaneous conditions before flagging an institutional Ignition Zone setup:
Gate 1 — Seller Exhaustion Washout: The stock has already digested a meaningful correction off its 52-week high, flushing out late momentum chasers and leveraged margin accounts.
Gate 2 — Off-Bottom Elasticity (+10% to +45% off 52W Low): Price has stopped making lower lows and proved real demand off the floor without being over-extended.
Gate 3 — Right-Side Moving Average Reclaim: Daily close reclaims both MA20 and MA60, proving medium-term institutional cost basis has flipped from overhead supply to support.
Gate 4 — 10-Day Institutional Volume Surge: Relative volume expands above 1.3x–1.5x its prior baseline, confirming block accumulation rather than a low-volume retail bounce. See live examples on $CELH and $NVDA.