What Is Overbought? Meaning & Example
Definition
Overbought describes an asset whose price has risen quickly and may be stretched above recent norms. It is a warning of possible pause, not a guarantee of a drop.
Related terms
Oversold describes an asset whose price has fallen quickly and may be stretched below recent norms. Prices can keep falling even when oversold.
Technical AnalysisTechnical analysis studies price charts, volume and indicators to look for patterns and trends. It focuses on market behavior rather than company finances.
VolatilityVolatility measures how much and how quickly prices move. Higher volatility means bigger swings, which bring both more opportunity and more risk.
What is Overbought?
Overbought describes an asset whose price has risen quickly and may be stretched above recent norms. It is a warning of possible pause, not a guarantee of a drop.
Can you give an example of Overbought?
An RSI reading above 70 is commonly labeled overbought.