Overbought

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Overbought refers to a condition when an asset is massively bought by investors and traded higher than its actual value. The term overbought is often used in technical analysis to indicate that a crypto asset has risen too far and too fast. So, a correction or pullback is likely to occur soon. In this context, the term suggests that the asset is overvalued and may enter a good selling opportunity.

However, it is essential to note that determining whether a crypto asset is truly overbought can be challenging, and it is often difficult to predict when a price correction will occur. The term overbought is common in several technical indicators that measure momentum such as RSI. The opposite of overbought is oversold.

Read also Introduction to Technical Analysis in Cryptocurrency.

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