Definition of Oversold:
The term oversold refers to a condition where an asset has traded lower in price and has the potential for a price bounce. An oversold condition can last for a long time, and therefore being oversold doesn't mean a price rally will come soon, or at all. Many technical indicators identify oversold and overbought levels. These indicators base their assessment on where the price is currently trading relative to prior prices. Fundamentals can also be used to assess whether an asset is potentially oversold and has deviated from its typical value metrics.
State of a security, or of the stockmarket, which has experienced an unexpectedly sharp price decline due to large scale selling. Such security or stockmarket is said to be ripe for price increase because all those who wanted to sell have already done so. Opposite of overbought.
Oversold to a fundamental trader means an asset it trading well below its typical value metrics. Technical analysts are typically referring to an indicator reading when they mention oversold. Both are valid approaches, although the two groups are using different tools to determine whether an asset is oversold.
Sold to a price below its true value.
Synonyms of Oversold
Aggrandized, Amplified, Ballyhooed, Disproportionate, Exaggerated, Excessive, Exorbitant, Extravagant, Extreme, Grandiloquent, High-flown, Hyperbolic, Inflated, Inordinate, Magnified, Overdone, Overdrawn, Overemphasized, Overemphatic, Overestimated, Overgreat, Overlarge, Overpraised, Overstated, Overstressed, Overwrought, Prodigal, Profuse, Puffed, Stretched, Superlative, Touted
How to use Oversold in a sentence?
- Oversold conditions can last for a long time, so prudent traders wait for the price to base out and start to move higher before buying.
- Technology stocks remain oversold and are considered ripe for buying.
- Fundamentals can also highlight an oversold asset by comparing current values to prior values in terms of price/earnings (P/E) and forward P/E, for example.
- Oversold conditions are identified by technical indicators such as the relative strength index (RSI) and stochastic oscillator, as well as others.
- Oversold is a subjective term. Since traders and analysts all use different tools, some may see an oversold asset while others see an asset that has further to fall.
Meaning of Oversold & Oversold Definition