The condition where a market rally has extended past fair value.
The implication of an overbought market is that it will top off and reverse at least in the context of a correction. Many technical indicators have been and are developed to determine overbought and oversold conditions. It should be noted that a strong market can stay technically “overbought” for a long period of time.
The opposite of overbought is oversold.
The category of technical indicators that have overbought or oversold interpretations is the oscillators. These include indicators such as RSI, Stochastic, Ultimate Oscillator etc.
Help us grow and Share/Vote for this Post
Get the latest updates from FXTimes