How do I that stocks are overbought or oversold?

Question

How do I that know stocks are overbought or oversold?

Answer 1

This is an issue that arises in technical analysis.  There are numerous indicators. They oscillate between extremes.  One is considered overbought, the other extreme is oversold.  RSI is very popular and is typical (details in the link).  Buying something that is oversold is not always a great idea.  Things can stay oversold for a long time and even get more oversold.

Answer 2

Absolutely true

Answer 3

are you trying to say, "How do I that know stocks are overbought or oversold?"

Answer 4

Use RSI, Bollinger Band for reference.

Answer 5

if cash price is less and fo price is more than stock is in over bought

if cash price is more and fo prices is less then stock is in over sold position

Answer 6

Look at the fundamentals relative to the price history. When there's no fundamental reason for a stock to go down, yet the price is at a 3 year low, it's probably oversold.

Answer 7

Look at the company's chart and see if the any of it's oscillators are showing oversold or overbought. Personally, I use Slow Stochastics or Williams %R. I've learned a lot  stockcharts.com. Read the info in the chart school tab if you want to learn more about technical analysis.

Answer 8

First, define major support and resistance levels. Using bollinger bands, if price pierced support and lower band, then closed above the lower band and major support, then you have an oversold condition. Consequently, when price breaks above resistance and upper bollinger bands, then closed below resistance and upper bands, you have an overbought condition.

Typically, when you find such price patterns, you have huge profit potential trading those patterns. Trade only with money you can afford to lose.

Do not bother to look at fundamentals. Fundamental analysis is backward looking. Determine instead what the market thinks, as reflected in price action.

Good luck! http://jsforex.blogspot.com