Can Sikuli work as functional regression testing tool

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Every testing strategy has to be implemented with the appropriate tools either on the Python or the Java level (which includes e.g. selenium, Groovy, JRuby and other Java aware systems).
There you can integrate the Sikuli features to run visual tests against a GUI.

So the answer is: Yes, if you have a regression testing tool, that allows to integrate Sikuli either with its Python or Java API.

--- at 2.
The resolution does not matter, as long as the captured image can be found on the target system pixel by pixel (means: the pixel content of the image needs to be the same).

Thanks for prompt reply.
--1:
Could you please eleborate in detail.
I have an idea of Selenium with c#. please give some direction how to integrate sikuli in selenium.

Thanks,
Rajni Sharma

Sikuli's API is documented on the highest level, which is a Python language implementation in Jython.

The Sikuli features itself are implemented in Java (the Python and Java API's (Java docs available) are nearly the same semantically).

The search engine itself is based on C++ modules, that use OpenCV and are connected to the Java level via JNI.

Talking about Selenium, most people do the Sikuli Integration by using the Java environment, since there all Sikuli features are available.

So I think, that if you decide to build something around Selenium with C++, it will not be possible to use Sikuli.

But make your own decision: Look into the sources. Depending on your needs it might be possible to use the one or other feature from Sikuli's C++ level. But that sounds for me a little bit like reinventing the wheel.