Crypto Terms: Letter O

What is Oversold?

Oversold MEANING:
Oversold - is used to signify that an asset is trading lower than its true value.
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Let's find out Oversold meaning, definition in crypto, what is Oversold, and all other detailed facts.

Oversold is a term that is the opposite of overbought. It is used to signify that an asset such as Ethereum or Bitcoin is trading lower than its true value. However, it is a subjective decision whether an asset is oversold or not because analysts employ different analysis tools.

The relative strength index (RSI) and Bollinger bands are two common technical indicators used to identify an oversold state. The RSI indicator employs a momentum oscillator to assess the rate and magnitude of price volatility.

Bollinger bands, on the other hand, are made up of three bands: lower, middle, and upper. The middle band taps into the moving average of an asset, whereas the lower and higher bands record standard price deviations from the middle band. When the numbers change towards the upper band, the market is said to be oversold.

Aside from technical indications, fundamental research might also identify an oversold state. Fundamental indicators rely on current and past prices. Though note that there is no documented reversal phase for the oversold event.

Besides, the reversal date is usually determined by "if" conditions. Analysts might notice, for example, that a change will occur only if a specific price level (sometimes referred to as a support level) is achieved.