ᐅ Oversold: what it is and how ⚡ to use it in trading

💸 Main
»
Cryptocurrencies
»
⚓ Crypto-Glossary
»
Oversold – What Is It?

Oversold – What Is It?

We share verified earning schemes daily on Telegram.
In our Telegram channel, you'll find crypto signals, insider info on HYIPs, combo deals for tappers, and coin giveaways. Only verified earning methods without fluff.

Subscribe to our Telegram channel

The state of an asset that is directly opposite to 👉 overbought.

An asset in an oversold state reaches a price minimum, the activity of sellers begins to decline, and potential buyers start paying closer attention to it.

This means that the best moment to buy the asset has either arrived or is approaching. However, it is important to remember that during a strong trending movement, an instrument can remain in an oversold state (or overbought state if the trend is upward) for quite a long time without any consequences.

A common mistake among beginners: buying an instrument as soon as it enters the oversold zone, and then, upon discovering that it continues to fall – selling it. The bottom often turns out to be false, and the market has a second one in store as a surprise. Therefore, you should not try to catch falling knives – this is the domain of experienced traders (and even many of them avoid doing so). It is better to wait until a reversal becomes evident or even until new support zones are tested.

Despite this, oversold conditions are still important – in combination with other indicators, they signal that it is time to consider buying. Just exercise caution and do not treat oversold conditions as a guarantee that the instrument will rise from its current levels. They are merely a promise of potential growth in the future if everything goes well.