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Overbought Definition

Overbought describes a condition where an asset's price has risen sharply and may be due for a pullback or consolidation.

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What is Overbought?

Overbought conditions are often identified using indicators such as the RSI or Stochastic oscillator.

Being overbought does not guarantee an immediate reversal, as strong trends can remain overbought for extended periods.

Example of Overbought

An RSI reading of 80 on a stock that has rallied sharply may suggest overbought conditions.

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