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Overbought

An oscillator in the upper zone: gains were strong relative to pullbacks.

Overbought is a state where an oscillator, most often RSI, enters the upper part of its scale, usually above 70. It means recent gains have been strong relative to pullbacks — and nothing more. In a range that state usually precedes a move back toward the middle; in a sustained trend the indicator can stay overbought for weeks while price keeps rising. Selling merely because it is above 70 is the most common mistake in working with oscillators.

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Overbought — what it means in trading — VVozny.com