// Definition
Overbought and oversold describe a market that has risen or fallen a lot in a short time, usually measured with an indicator such as RSI.
Explained simply
Overbought means price has risen quickly and may be stretched; oversold means it has fallen quickly. On RSI these are typically readings above 70 and below 30.
Stretched does not mean finished. Strong trends often stay overbought or oversold far longer than beginners expect.
Tip
"Overbought" is not a sell signal by itself. Wait for structure to change before acting against a strong trend.
For education only, not financial advice. Trading is risky and you can lose money.