Overbought Oversold Trading Indicator

ℹ️ What is Overbought?
Overbought occurs when a market instrument is considered to have too much buying position in a certain period of time. It is often said that such a position is not justified by fundamental or technical analysis. In overbought condition, the price of a security, commodity or currency has increased significantly in a certain period of time and will cause an immediate decline from certain price level.

Overbought condition can be determined with technical analysis using specific indicators that have been designed to signal this condition. Oscillators are the most preferred indicators for this purpose. You can find more such indicators in forex market and for sure for other markets as well.

The opposite condition is called as oversold. Both overbought and oversold are the extreme condition. So, you need to be careful while trading with them. And be sure that the market is not in a trending condition as overbought and oversold are often fail in such market.