Oversold

Oversold refers to a market condition where an asset is considered undervalued, typically after a sharp decline, suggesting it may be poised for a rebound. It signals excessive selling pressure that could soon reverse.

How Oversold Levels Are Detected

Traders use technical indicators like the Relative Strength Index (RSI) to identify oversold assets. An RSI below 30 commonly signals that an asset may be oversold and due for a bounce.

Why It’s Useful for Traders

Spotting oversold conditions can help traders identify potential entry points during market dips. It’s especially helpful in volatile markets, where emotions can drive prices below fair value.