Overbought vs. Oversold Stocks: What’s the difference and how to tell?

Overbought and oversold are just simple ways to describe when a stock price has moved too much, either too high or too low.

A stock is overbought when:

• Too many people are buying it

• The price has gone up too fast

It may soon come down (price drop)

For Example:
Like when a bag of rice suddenly jumps too high in price, people will stop buying, and price may fall.

and…

A stock is oversold when:

• Too many people are selling

• The price has dropped too much

It may soon go up (price rise)

For Example:
Like when tomatoes are too cheap in the market, people rush to buy, and price can rise again.

Here is my Advice:

• Overbought = be careful (price may fall)

• Oversold = look closely (may be opportunity)

But don’t just jump in, always understand why the price moved.

and Buy when value is low, not when noise is high.