When there is a sell-off, LEV is usually negative, becuase there is "eagerness to sell."
So yes, you van use extreme negative LEV levels as an indication for a possible oversold bounce.
I would however prefer to then look at price.

LEV is more interetsing to tell you when buyers come in after the price has fallen down and is still in a down trend.
But please, do back-test these ideas for your market.



Pascal