Oversold
In technical analysis, the term “oversold” refers to a situation in which the price of a financial instrument has declined too far and too fast. An oversold condition suggests that selling pressure has driven the price to unsustainable levels, and a reversal might be imminent. Key points about oversold conditions: Relative Strength: Oversold conditions are often identified using technical indicators that measure an asset’s relative strength or momentum. Commonly used indicators include the Relative Strength Index (RSI), Stochastic Oscillator, and Williams %R. Indicator Thresholds: These technical indicators typically assign numerical values that range from 0 to 100. A reading below a certain threshold (often 30 for RSI, for example) is considered an oversold condition. However, the specific threshold might vary depending on the asset’s characteristics and market conditions.
Related Terms
- Volume
- Uptrend
- Support
- Risk-Reward Ratio
- Reversal
- Retracement
- Resistance
- Relative Strength Index (RSI)
- Price Action
- Position Sizing
- Overbought
- Moving Average Convergence Divergence (MACD)
- On Balance Volume (OBV)
- Trendline
- Mean Reversion
- Volume
- Uptrend
- Support
- Risk-Reward Ratio
- Reversal
- Retracement
- Resistance
- Relative Strength Index (RSI)
- Price Action
- Position Sizing
- Overbought
- Moving Average Convergence Divergence (MACD)
- On Balance Volume (OBV)
- Trendline
- Mean Reversion
- Moving Average (MA)
- Inverse Heads & Shoulders
- Heads & Shoulders
- Flag
- Drawdown
- Downtrend
- Double Top
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- Distribution
- Descending Triangle
- Cup & Handle
- Consolidation
- Candlestick
- Breakout
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- Bollinger Bands
- Bearish Divergence
- Bullish Divergence
- Backtesting
- Ascending Triangle
- Accumulation
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- Automated teller machine
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- Vega
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