Foreign Exchange Rates

An asset that has experienced sharp upward movements over a very short period of time is often deemed to be Overbought. Determining the degree in which an asset is overbought is very subjective and can differ between investors.

Overbought – Oversold relative, said the price of an asset is increased to the level of fundamental factors, often driven up in price after a short time. This could mean the market is liable to a downward correction. In technical analysis, when a financial instrument’s Relative Strength Index of more than 75%, generally regarded as overbought. The opposite is called “oversold. “