Oversold Definition - Glossary

Oversold is a market condition where an asset is undervalued and may experience a price rebound soon.

Oversold is a term used to describe a situation where an asset's price has dropped significantly, often due to excessive selling. This usually indicates that the asset is undervalued. Technical analysts use various indicators, like the Relative Strength Index (RSI), to identify oversold conditions. An oversold asset may be poised for a price correction or rebound, as traders anticipate a potential reversal. However, being oversold does not guarantee an imminent price increase. It is essential to consider other factors and perform thorough analysis before making investment decisions.