Overbought and Oversold （In Crypto Space ）

Overbought refers to the over-buying of crypto assets and is used when cryptocurrency is believed to be trading at a level above its intrinsic value. The opposite of overbought is oversold which refers to the over-selling of crypto assets and is used when cryptocurrency is believed to be trading below its intrinsic value. When a cryptocurrency is overbought or oversold, it’s possible to spot a trend reversal in its price.

For example, when an asset’s price shows sustained growth and is in an overbought region, the price of that asset is likely to fall in the short term.

There are various approaches to spot overbought and oversold conditions. Indicators such as KDJ, ROC, WILLR, and MACD can all be used to analyze these conditions in the cryptocurrency market.