Oversold is the condition in which a stock is extended to the downside following a downtrend, and is due for some consolidation or retracement. Oversold readings may be found by using oscillators, or simply by seeing that a stock has fallen too far in too short of time. Oversold stocks are due for a bounce due to the climax of selling in an event such as capitulation. An oversold stock is falling in price at an unsustainable rate.
Oversold is the opposite of overbought.
Anytime a stock or index becomes oversold, we highlight it for members of our stock pick service. Come trade with us!
Return to the main chart patterns page to learn more terms.
