overbought/oversold indicator

Definition

A technical analysis tool that attempts to define when prices have moved too far and fast in either direction. This is usually calculated based on a moving average of the difference between the number of advancing and declining issues over a certain period of time. If the market is considered overbought, the technical analyst will sell, and if the market is considered oversold, he/she will buy.

Related Terms

Browse by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
overbought indicator