- An 'overbought' condition occurs when an asset is believed to be trading at a level above its intrinsic or fair value, indicating a potential pullback or price correction.
- 'Oversold' refers to a situation where an asset is trading below its intrinsic value, suggesting a possibility for a price increase or a bullish reversal.
- Traders often use technical indicators like the Relative Strength Index (RSI) to identify overbought or oversold conditions, which can signal potential entry or exit points.
Could someone break down what 'Overbought' and 'Oversold' mean when you're looking at market analysis? I've come across these terms a bunch and wanna get a solid grasp on the concept without all the technical jargon, if that's possible. Cheers for any insights you can share!
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